Per S.S. Sekhon :

1. (a) The appellants are engaged in the manufacture of various steel products falling under Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985. In their manufacture, they use 'dolomite bricks' in the furnaces as refractory materials. For the manufacture of 'dolomite bricks', the appellants use, inter alia, coal tar pitch in liquid form. This coal tar pitch emerges at a temperature of 300 degrees centigrade having softening points varying from 95 degrees centigrade to 105 degrees centigrade. The said coal tar pitch is loaded in an insulated tanker in a liquid form and unloaded in the calcining refractory material plant within the factory and used in the manufacture of the dolomite bricks.

(b) The appellants also manufacture solid pitch having softening point varying from 90 to 114 degrees centigrade and the same, in solid form, after being packed in HDPE bags is cleared on payment of appropriate duty.

(c) The appellants avail the benefit of Notfn. 67/95-CE dtd. 16.3.95 in respect of the 'dolomite bricks' manufactured within the factory and used in the furnaces in the manufacture of the various steel products.

(d) A show cause notice dtd. 15.10.96 was issued proposing to demand duty on the coal tar pitch that is produced and captively consumed in the manufacture of 'dolomite bricks' within the factory. The notice proposed to demand duty on the ground that the benefit of Notfn. 67/95 dtd. 16.3.95 was not available to the coal tar pitch captively consumed since the dolomite bricks that were being manufactured using the same were exempted from payment of duty under Notfn. 67/95-CE dtd. 16.3.95. The longer period of limitation was proposed to be invoked on the ground that the appellants had not informed the Department about the emergence of the coal tar pitch and its consumption within the factory without payment of duty in the manufacture of dolomite bricks on which exemption was availed under the Notfn. 67/95-CE dtd. 16.3.95.

(e) After the appellants submitted the reply to the show cause notice, the impugned order has been passed confirming the demand of duty and imposing penalty.

(f) Hence this appeal.

2. We have heard both sides and considered the submissions and find:-

(a) The first submission of the appellants is that there is no evidence led by the Department to show that the coal tar pitch, emerging at 300 degrees centigrade, in a molten stage and used in the same condition in the manufacture of 'dolomite bricks', is capable of being marketed or is actually being marketed in that condition. In the absence of any evidence of marketability, the demand is unsustainable. Reliance is placed on the following decisions: