ORDER :

1. This is a statutory appeal filed by the assessee under Section 35L(b) of the Central Excise Act, 1944 (for short ‘the Act’) against the final Order No. 698 of 2002 dated 31st May 2002 in Appeal No. E/906/99 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, South Zonal Bench at Bangalore (for short ‘the Tribunal’). By this order the Tribunal has rejected the appeal filed by the appellant and has held that Benzyl Methyl Salicylate (for short ‘BMS’) is marketable and therefore liable to excise duty.

2. The appellant-company is engaged in the manufacture of patent and proprietary medicines and organic chemicals (bulk drugs and intermediate) falling under Chapters 29 and 30 of the Central Excise Tariff Act, 1985 (for short ‘Tariff Act’) in their factory at Virgonagar, Old Madras Road, Bangalore. Appellant filed classification lists with effect from 5.6.1986 and 1.3.1987 in which they declared that one of the items, viz. BMS prepared in their factory was a non-excisable item.

3. The Revenue issued two separate show cause notices both dated 25th August 1987 wherein it was proposed that BMS was an item liable to duty under sub-heading 2913.00 of the Tariff Act prior to 9.2.1987 and under sub-heading 2942.00 after 9.2.1987. The appellant submitted its reply to the show cause notices on 14th October 1987. It was stated in the reply that BMS was not an excisable commodity since the same was neither sold by it nor was it being purchased by any other party. It was also pointed out that the show cause notices did not give any ground based on which the proposal was made to levy duty on BMS.

4. The Assistant Collector, by the order in original dated 28th February 1988, held that BMS was an excisable product and is classifiable under Chapter Heading 2913.00 upto 9.2.1987 and under Chapter Heading 2942.00 from 10.2.1987 onwards.

5. The appellant filed a writ petition in the High Court challenging the aforesaid order in original. The High Court, by its order dated 27th July 1988, quashed the said order and directed the Assistant Collector to decide the issue afresh. In another round of litigation, the product in question was held to be excisable and on appeal before a Division Bench of the High Court, the matter was remanded back to the Assistant Collector for passing a detailed order on the question whether the goods were excisable or not after affording due opportunity to the parties to lead their evidence.

6. Pursuant to the said order, the appellant submitted detailed letters dated 16.3.1992 and 3.4.1992.

7. The Assistant Collector passed a fresh order dated 21.4.1992/23.4.1992 wherein he examined the issue in detail and after referring to the various decisions of this Court on the issue of mar ketability held that the enquiries made by the Revenue to ascertain the mar ketability of BMS had not yielded any tangible results and that the Assistant Drug Controller of India at Custom House, Bombay, had also stated that there had been no import or export of BMS at the port of Bombay. The Assistant Collector also referred to the evidence produced by the appellant by way of affidavits and letters from bulk drug dealers to hold that BMS manufactured was not marketed. It was also held that the Department had not been able to furnish any documents regarding the marketability of the goods in question. Following the decision of this Court in the case of Bhor Industries Ltd. vs. CCE, 1989 (40) ELT 280 (SC) : 1989 (1) SCC 602 the Assistant Collector held that BMS was not excisable product under the Tariff Act. The aforesaid order of the Assistant Collector was reviewed by the Collector of Central Excise, Bangalore, under Section 35E(2) of the Act and in pursuance to the said review, an appeal was filed before the Commissioner of Customs and Central Excise (Appeals) against the order in original.

8. The Commissioner (Appeals), by order dated 1.3.1999, held that BMS was marketable and, therefore, liable to central excise duty. The only