Prestressed cement concrete poles held "goods" under Section 3 because single-source sale can prove marketability

SC upheld that prestressed cement concrete poles are "goods" under Section 3 because they are marketable. The court held marketability is a question of fact and does not require broad availability or multiple purchasers; availability from a single source or sale to a single purchaser still establishes a market. The appellant's own admission that poles were bought from independent contractors undermined its position. Tribunal's finding that the poles were marketable and taxable was affirmed and the appeal was dismissed.

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Issues Involved:
1. Whether prestressed cement concrete poles manufactured by the appellant are "goods" within the meaning of Section 3 of the Central Excises and Salt Act, 1944.
2. The relevance of marketability in determining whether an item is considered "goods" under the Act.

Detailed Analysis:

1. Whether prestressed cement concrete poles manufactured by the appellant are "goods" within the meaning of Section 3 of the Central Excises and Salt Act, 1944:
The primary issue in this case is whether the prestressed cement concrete poles manufactured by the Andhra Pradesh State Electricity Board are "goods" as defined under Section 3 of the Central Excises and Salt Act, 1944. Section 3 levies duties of excise "on all excisable goods ... which are produced or manufactured in India." The term "excisable goods" is defined in Section 2(d) of the Act, but the term "goods" is not explicitly defined.

The appellant contends that the poles are not "goods" because they are not marketable. They argue that the poles are manufactured for their own use and not sold in the market, thus lacking marketability.

2. The relevance of marketability in determining whether an item is considered "goods" under the Act:
The appellant's counsel, Shri Shanti Bhushan, argued that the poles are not marketable because they are not sold in the market and are unknown to the market. The excise authorities did not provide any instance where these poles were sold, supporting the claim that they are not marketable and hence not "goods" under the Central Excise Act.

On the other hand, the counsel for the Revenue, Sri Joseph Vellapalli, argued that the poles are indeed marketable. He pointed out that the appellant's earlier plea that these poles were manufactured by independent contractors from whom the appellant-Board purchased them indicates marketability. He cited the case of the Kerala State Electricity Board, where similar poles were purchased from independent contractors, establishing that such poles have a market. The fact that the appellant does not sell these poles does not affect their marketability.

The court reviewed several precedents to understand the concept of "marketability":

- Union of India v. Delhi Cloth & General Mills: The court held that "refined oil" at an intermediate stage of production of vanaspati was not marketable because it was not deodorised and hence not known to the market.

- South Bihar Sugar Mills Ltd. v. Union of India: The court held that a mixture of gases generated during the manufacturing process was not marketable as "compressed carbon dioxide" because it did not meet market specifications.

- Union Carbide India Ltd. v. Union of India: The court held that aluminium cans in their crude form were not marketable as they were not sold in that state and were not capable of being sold to a consumer.

- Bhor Industries Ltd., Bombay v. Collector of Central Excise, Bombay: The court held that crude PVC films were not marketable products and hence not "goods" for the purposes of Section 3.

- Collector of Central Excise v. Ambalal Sarabhai Enterprises: The court held that starch hydrolysate was not marketable because it was highly unstable and could not be stored or marketed.

The court concluded that "marketability" is a question of fact to be decided based on the specific circumstances of each case. The fact that goods are not actually marketed is irrelevant as long as they are marketable. Even if goods are available from only one source or a specified market, they are still considered marketable.

In this case, the court found that the poles manufactured by the appellant are marketable. The fact that similar poles are purchased by the Kerala State Electricity Board from independent contractors indicates that such poles have a market. The appellant's own plea before the excise authorities that these poles were manufactured by independent contractors from whom it purchased them further supports their marketability.

Conclusion:
The court dismissed the appeals, holding that the prestressed cement concrete poles manufactured by the appellant are "goods" within the meaning of Section 3 of the Central Excises and Salt Act, 1944. The marketability of the poles was established based on the fact that similar poles are purchased by other electricity boards from independent contractors. The court affirmed the conclusion of the Tribunal and dismissed the appeals with no costs.

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