Supreme Court emphasizes marketability in goods classification under Central Excise Act

The Supreme Court allowed the civil appeal filed by the Visakhapatnam Port Trust, emphasizing the importance of establishing marketability in classifying goods under the Central Excise Act. The Court found that the Cement Concrete Armour Units (CCAU) used by the Port Trust for breakwaters were custom-made for specific locations and not interchangeable, with no evidence of being bought and sold in the market. The Tribunal's failure to address the issue of marketability was noted, leading to the appeal's success without costs.

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Issues:
Determining whether Cement Concrete Armour Units are excisable goods under the Central Excise Act.

Analysis:
The main issue in this civil appeal is the exigibility of Cement Concrete Armour Units (CCAU) used by the Visakhapatnam Port Trust for the installation of breakwaters in the outer harbor. The Department contends that these units are excisable goods under the Central Excise Act. To establish whether the CCAU are indeed goods, the twin tests of process constituting manufacture and marketability need to be satisfied. The focus of this case is on the marketability test. Goods are typically manufactured with the intention of being sold in the market; hence, if the goods are not capable of being sold, the test of marketability is not met. The burden lies on the Department to prove both the process of manufacture and the marketability of the product.

Upon examining the facts of the case, it is revealed that the CCAU are custom-made concrete blocks designed for specific locations within the harbor, based on water level requirements. Each unit is tailored for a particular location and is not interchangeable with units from other harbors. The literature on Port Engineering and the contract entered into by the Port Trust support this specificity. Crucially, there is no evidence to suggest that these units are bought and sold in the market as commodities. The absence of evidence regarding marketability is a significant point of contention in this case.

It is noted that the Tribunal failed to address the issue of marketability in its judgment, which is a critical aspect in determining whether the CCAU qualify as excisable goods. In light of the lack of discussion on marketability and the evidence presented, the Supreme Court finds merit in the civil appeal filed by the Visakhapatnam Port Trust. Consequently, the civil appeal is allowed with no order as to costs, emphasizing the importance of establishing marketability in classifying goods under the Central Excise Act.

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