Railway's Own Printed Forms Cannot Attract Excise Duty, As They Cannot Be Sold In The Market: CESTAT Mumbai

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai, has held that railway-specific printed stationery made exclusively for Western Railway's own use was not liable to excise duty because the Revenue failed to establish that the material could be bought and sold in the market.

A Bench of Judicial Member Ajay Sharma and Technical Member M.M. Parthiban set aside the ₹95.93 lakh excise duty demand against the Western Railway Printing Press, along with interest and a penalty equal to the duty.

The case concerned stationery produced by the printing press, including reservation slips, receipt books used by Travelling Ticket Examiners to collect excess fares, fines, and penalties, and working timetables used by motormen. The press also produces registers, account books, forms, order books, letter pads, file covers, and other stationery made from paper and paperboard.

The order records that these items carry printed characters, letters and the Western Railway logo. They are meant exclusively for use within the departments, divisions, and sections of Western Railway.

The Revenue classified the goods under Central Excise Tariff sub-heading 4820.10 and treated them as liable to central excise duty at 12%, along with education cess and higher education cess.

In simple terms, the dispute was whether railway-specific forms and stationery made for internal use could be treated as excisable goods when they were not meant for ordinary sale in the market.

The Commissioner of Central Excise had confirmed a duty demand of ₹95,93,181, along with interest under Section 11A of the Central Excise Act. A penalty equal to the duty was also imposed under Rule 25 of the Central Excise Rules.

Western Railway relied on two earlier decisions of the tribunal involving similar demands. Those orders, dated May 6, 2015 and November 2, 2023, had been decided in its favour.

The tribunal noted that the earlier rulings had examined both the excisable nature of the printed material and its marketability. It found that the liability to pay central excise duty was not legally sustainable.

In the earlier case involving Central Railway, the tribunal had found that railway-specific forms and other printed material were used in-house. It held that such material could not be bought and sold for consideration and that the Revenue had failed to produce evidence establishing its marketability.

The present tribunal applied that reasoning to Western Railway's case. It noted that the Revenue had again failed to discharge its burden of proving that the products were marketable.

The tribunal also relied on Supreme court decisions holding that marketability is an essential requirement for goods to attract excise duty. Merely falling within a tariff heading does not make an item dutiable if it is not a marketable commodity.

The tribunal found that the issue was already settled by its earlier decisions concerning the same activity. It therefore set aside the Commissioner's order dated May 21, 2014 and allowed Western Railway's appeal.

For the Appellant: (Western Railway): Advocate Delilah Fernandes, 

For the Revenue: Xavier Mascarenhas, Authorised Representative