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Issues: (i) Whether the processed cotton fabrics and artificial silk fabrics, in the form of herefit sheets, thermoplastic sheets and celluloid sheets, amounted to manufacture of excisable goods liable to duty under the First Schedule to the Central Excises and Salt Act, 1944. (ii) Whether the civil suit challenging the levy and collection of duty was barred by the statutory provisions governing jurisdiction.
Issue (i): Whether the processed cotton fabrics and artificial silk fabrics, in the form of herefit sheets, thermoplastic sheets and celluloid sheets, amounted to manufacture of excisable goods liable to duty under the First Schedule to the Central Excises and Salt Act, 1944.
Analysis: The essential test applied was whether the processing brought into existence goods having a distinct name, character or use and whether the resultant products were marketable. The sheets were manufactured through a separate process, had identifiable commercial character, and were not shown to be incapable of being taken to the market. Actual sale was not necessary; manufacture or production of goods was the taxable event. The materials also answered the description of the tariff items relating to fabrics impregnated or coated with artificial plastic materials.
Conclusion: The processed sheets were excisable goods and the levy and collection of duty were lawful.
Issue (ii): Whether the civil suit challenging the levy and collection of duty was barred by the statutory provisions governing jurisdiction.
Analysis: The statutory bar was not treated as absolute. A civil court can entertain a suit where the levy is alleged to be wholly without authority of law, and the protection for acts done in good faith does not extend to illegal action beyond jurisdiction. On the facts, once the levy was held to be lawful, the jurisdiction objection ceased to assist the appellant.
Conclusion: The suit was not barred on the footing urged by the appellant.
Final Conclusion: The impugned levy on the processed fabrics was upheld, the respondent's challenge failed, and the decree in its favour could not stand.
Ratio Decidendi: Where processing of fabrics results in a commercially identifiable and marketable product falling within the tariff description, the product is manufactured goods exigible to excise duty even if used captively at an intermediate stage in the manufacture of another final product.
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