Case Note & Summary
The case involved an appeal filed by the Commissioner of Central Excise against the decision of the Customs, Excise & Gold (Control) Appellate Tribunal regarding the imposition of excise duty on Methane gas produced by M/s. Gurdaspur Distillery. The respondent was engaged in manufacturing de-natured Ethyl Alcohol, during which Methane gas was produced as a by-product and used as fuel in the distillery. A show cause notice was issued by the Revenue for the imposition of excise duty amounting to Rs. 17,83,678 for the period from 01.04.1995 to 31.07.1997, invoking the extended period under Section 11A(I) of the Central Excise Act, 1944. The respondent contended that the Methane gas was not marketable, and thus no excise duty could be levied. The Adjudicating Authority confirmed the demand and imposed a penalty. However, the Commissioner (Appeals) accepted the appeal, concluding that the burden of proof regarding marketability lay with the Department, which failed to discharge it. The Tribunal upheld this finding, leading to the current appeal. The Supreme Court noted that marketability is essential for excise duty liability and that the Revenue did not provide evidence to prove the gas's marketability. Consequently, the court dismissed the appeal, affirming the lower authorities' findings.
Headnote
A) Excise Duty - Marketability - Essential Ingredient for Duty - Central Excise Act, 1944, Section 11A - The court held that an article does not become liable to excise duty merely because it is specified in the schedule unless it is salable and known to the market. The Revenue failed to provide evidence of marketability, thus confirming the lower authority's finding that Methane gas was not marketable (Paras 3-4).
Issue of Consideration
Whether Methane gas classifiable under Chapter Heading 2711.29 is liable to excise duty when consumed captively and not marketed.
Final Decision
The Supreme Court dismissed the appeal, confirming that the Revenue failed to prove the marketability of Methane gas, which is essential for the imposition of excise duty.
Law Points
- Excise duty
- marketability
- Central Excise Act
- 1944
- burden of proof
- Tribunal findings
