Full Judgment Text
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CASE NO.:
Appeal (civil) 7769 of 2001
Appeal (civil) 8460-8483 of 2001
PETITIONER:
THE COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-II, CHANDIGARH.
Vs.
RESPONDENT:
COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I, CHANDIGARH.
DATE OF JUDGMENT: 15/03/2002
BENCH:
M.B. Shah & B.N. Agrawal
JUDGMENT:
Shah, J.
The Commissioner of Central Excise, Chandigarh has
challenged the order dated 8th May 2000 passed by the Customs,
Excise and Gold (Control) Appellate Tribunal, New Delhi (for short
referred to as "CEGAT") in Appeal No.E/3084/99-D etc., by which
the Tribunal dismissed the appeals preferred by the revenue involving
the common question whether the respondents were engaged in the
manufacturing/propagation of yeast leviable to central excise duty.
Hence, these appeals.
Therefore, the short question involved in these appeals is
whether the ’yeast’ propagated by the respondents having self-life of
6-8 hours which can be preserved in containers was excisable to the
customs duty under description of heading 21.02 of the Central Excise
Tariff Act. The Tariff Heading 21.02 reads thus: -
Heading Sub- Description of Goods Rate of
No. Heading No. Duty
21.02 Yeasts (active or inactive); other
single-cell micro-organisms, dead
(but not including vaccines of
Chapter 30); prepared baking
powders
2102.10 Put up in unit containers and 10%
ordinarily intended for sale
2102.90 Other. 10%
Learned counsel for the appellant submitted that the order
passed by the CEGAT is on the face of it illegal in view of the
aforesaid specific Item No.21.02 which makes yeast as excisable. He
submits that the CEGAT has arrived at the conclusion that its life is
for 6-8 hours and there is no reason to hold that it is not marketed or
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marketable.
As against this, learned counsel appearing on behalf of the
respondents submitted that the contention raised by the counsel for the
appellant is totally beside the point as it was never contended by the
respondents before the CEGAT that yeast is not excisable. What was
contended before the CEGAT was that respondents were not
manufacturing yeast. On the contrary, they were purchasing yeast
from the market and propagating the same for manufacture of potable
liquor.
In our view, it would be misreading the order passed by the
CEGAT to hold that it has arrived at the conclusion that yeast is not
excisable. The CEGAT has held that the process adopted by the
respondents of purchasing the yeast from the market which is
excisable and mixing it with molasses and water for propagating the
same cannot be held to be manufacture of yeast, as such liquid in
mixture form is not marketable. In the present case, in the show cause
notice issued by the Assistant Commissioner the process adopted by
the respondents is mentioned which makes the position clear. It is
stated in the show cause notice that party is engaged in
manufacture/propagation of yeast for captive consumption in
manufacture of potable Ethyl Alcohol. For that purpose, two
processes are adopted by the party. Firstly, respondents purchase
fresh yeast of 500 grams packets from the agents of yeast
manufacturing Company. They mix 10 kilograms of fresh yeast with
molasses purchased from the market which is diluted in water in a
tank capacity of 10,000 litres, where it is propagated for 13 hours.
The said mixture is called ’BUB’ as defined in the Punjab Distillery
Rules, 1932. The said BUB is shifted to fermentation vessel. After
fermentation, it is called ’WASH’ as defined in the Distillery Rules.
Similarly, the party also purchases yeast culture procured from the
National Chemical Laboratory, Pune. First molasses are taken in a
small flask of 50 ml. and a pinch of yeast from slant or brought out
yeast is added with the help of Platinum wire. The mixture so
obtained is kept in a particular temperature in BOD incubator for
about 21 hours. Thereafter, the said mixture is later transferred into
another flask of 250 ml. wherein molasses and water is already stored.
The process continues and thereafter the mixture is finally kept in a
vessel having capacity of 100000 litres. It is also known as ’BUB’ vat
placed in the fermentation Hall. The mixture is permitted to ferment.
This fermented mixture is used for manufacture of potable alcohol
and, therefore, this intermediate product of molasses and yeast is
excisable.
On the basis of the show cause notice, the Assistant
Commissioner after hearing the parties arrived at the conclusion that
the manufacturing process of ’WASH’ as given in the show cause
notice would be covered within the category of active yeast as it is
produced from culture yeast or seed yeast purchased from laboratory
or market. The product ’WASH’ would be covered within the
category of Baker’s yeast. That order was set aside by the
Commissioner (Appeals) by holding that the goods in question were
having a very short self-life; there was no evidence to prove that such
goods were either marketed or were marketable. That finding is
upheld by the CEGAT.
As stated above, in the appeals before the CEGAT, there was
no dispute that ’yeast’ itself is exigible to duty, but what was
contended before the Tribunal was limited to the so-called product of
yeast obtained by propagating the same by mixing it with molasses
and water for manufacture of potable alcohol. Hence, in our view, the
finding given by the CEGAT cannot be held to be, in any way, illegal
or erroneous because it has not been proved that such intermediate
product is marketed or marketable. For this purpose, the CEGAT has
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rightly relied upon the decision of this Court in Union of India v.
Delhi Cloth and General Mills Co. Ltd. [(1997) 5 SCC 767]. The
CEGAT has also relied upon the decision in Collector of Central
Excise, Baroda v. M/s Ambalal Sarabhai Enterprises (P) Ltd.
[(1989) 4 SCC 112] for holding that in such cases the burden is on the
Department to prove that such goods were either marketed or were
marketable. Further, this Court in Collector of Central Excise,
Baroda v. United Phosphorus Ltd. [(2000) 4 SCC 18] observed that
though the intermediate goods so coming into existence may be
specified in the Schedule as excisable, they would not be subjected to
duty unless they satisfy the test of marketability.
Hence, there is no substance in these appeals and are dismissed,
with no order as to costs.
..J.
(M.B. SHAH)
J.
March 15, 2002. (B.N. AGRAWAL)