Summary
The appellant is a manufacturer of Crude PVC films for the purpose of use in final products such as leather cloth and laminate jute mattings and PVC tapes both insulation and adhesive. The films manufactured by the appellant were subject matter of adjudication by the Excise authorities during the period commencing from 1st March, 1970 to 29th May, 1971. The Appellate Collector of Central Excise by an order dated 14.1.1974 held that the appellant had produced sufficient evidence to prove that the said Crude PVC films were not marketable and were therefore not liable to excise duty. On 20.11.1975 the appellant filed a classification list in respect of Crude PVC films used for lamination with jute and for tapes claiming that the said PVC films were non-excisable on the ground that the same were non-marketa- ble intermediate products used exclusively for captive consumption. On 9.12.1975 the classification list was ap- proved by the Assistant Collector, Central Excise.
On 15.2.1977, however, the Assistant Collector issued a show 383cause notice calling upon the appellant to show cause as to why the aforesaid films should not be re-classified as excisable under Item No. 15A(2) of the Central Excise Tariff Schedule and appropriate duty not recovered under Rule 10 of the Central Excise Rules, as these then stood, read with Rule 173-J. By a corrigendum, dated 23.2.1977, to the said show cause notice Rule 10-A was substituted in place of Rule 10. The appellant contested the notice but the Assistant Collector vide his order dated 16th February, 1978 confirmed the said show cause notice by holding that the said PVC films were classifiable under Item No. 15A(2) and directed the appellant to pay duty at the appropriate rate on past clearances under Rule 10-A read with Rule 173-J.The appeal filed against the aforesaid order was reject- ed by the Appellate Collector of Central Excise on 10th October, 1979. A revision was preferred before Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal confirmed the order of the Appellate Collector and held that the goods in question fell under Tariff Item No. 15A(2) and were dutiable in the intermediate list and the question of marketability or being capable of being sold in the market was not relevant, but modified the order to the extent that duty in respect of clearances prior to the issue of show cause notice was restricted to the period permissible in terms of Rule 10 read with Rule 173-J viz. 12 months.In the statutory appeal to this Court under Section 35-L, of the Central Excises and Salt Act, 1944 the question for consideration was whether the Crude PVC film was dutiable under Item No. 15A(2).Allowing the appeal,HELD: 1. In view of the Appellate Collector's order holding that the Crude PVC films were not marketable goods and there being no contrary evidence found by the Tribunal subsequent to the finding by the Appellate Collector no excise duty should be charged under Item No. 15A(2) of the Central Excise Tariff on the Crude PVC Sheets. The Tribunal went wrong in not applying the proper test. The test of marketability or capable of being marketed was not applied by the Tribunal. [395D-E]2. Under the Central Excise Act, as it stood at the relevant time, in order to be goods as specified in the entry the first condition was that as a result of manufac- ture goods must come into existence. For articles to be goods these must be known in the market as such or these 384must be capable of being sold in the market as goods. Actual sale in the market is not necessary, user in the captive consumption is not determinative but articles must be capa- ble of being sold in the market or known in the market as goods. Taxable event in the case of duties of excise is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. The manufacturer could not be taxed unless manufacturing process resulted in pro- duction 'of goods as known in the market'. The expression"goods manufactured or produced" must refer to goods which are capable of being sold to the consumer. [389B-C; 391F]Union of India v. Delhi Cloth and General Mills, [1963]Suppl. 1 S.C.R. 586; South Bihar Sugar Mills Ltd. etc. v.Union of India & Ors, [1968] 3 S.C.R. 21; Union Carbide India Ltd. v. Union of India, [1986] 2 S.C.C. 547; Governor General in Council v. Province of Madras, [1945] 7 F.C.R.179; In Re. the Bill to Amend S. 20 of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act, 1944, [1964] 2 S.C.R. 787; applied.3. Simply because a certain article falls within the Schedule it would not be dutiable under excise law if the said article is not 'goods' known to the market. Marketabil- ity, therefore, is an essential ingredient in order to be dutiable under the Schedule to the Central Tariff Act, 1985.[392F-G]3.1. In the instant case, the Crude PVC films as pro- duced by the appellant were not known in the market and could not be sold in the market and were therefore not capable of being marketable. [392G-H]See the full content of this document
Extract
Bhor Industries Ltd., Bombay VS. Collector Of Central Excise, Bombay
PETITIONER: BHOR INDUSTRIES LTD., BOMBAY Vs.RESPONDENT: COLLECTOR OF CENTRAL EXCISE, BOMBAYDATE OF JUDGMENT31/01/1989BENCH: MUKHARJI, SABYASACHI (J)BENCH: MUKHARJI, SABYASACHI (J)RANGNATHAN, S.CITATION: 1989 AIR 1153 1989 SCR (1) 382 1989 SCC (1) 602 JT 1989 (1) 450 1989 SCALE (1)226CITATOR INFO : R 1989 SC2066 (5)R 1990 SC 59 (4)R 1990 SC1676 (11)R 1990 SC1893 (4)RF 1991 SC 999 (7)ACT: Central Excises and Salt Act, 1944/Central Excise Rules, 1944: Sections 2(d), 2(f), 3, 35-L and 35-P/Rules, 10-A 173-J.Excise duty--Excisable goods--Mere fact that an article falls within Tariff Schedule is not enough--Taxable event is'manufacture of goods'--Which are marketable or capable of being marketed-Marketability is an essential element--Burden of proof on revenue that goods are marketable.Central Excise Tariff Act, 1985: Schedule Item 15-A(2)-Production of crude PVC films--Non-marketable--Intermediate products--Used for captive consumption in end products such as leather cloth--Laminated jute mattings and PVC tapes--Whether clas- sifiable and liable to duty.Words and Phrases: 'Excisable goods'-'Manufacture'--Meaning of.JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2820 of 1984.From the Order dated 25.4.84/4.5.84 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. F.D. (SB)(T) A. 9...
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