Tribunal rules coils by Electricity Board not "goods" under Act as not marketable commodities.

The Tribunal ruled that coils manufactured by the Electricity Board were not considered "goods" under the Act as they were not marketable commodities but used captively as parts of transformers. The Tribunal dismissed the department's appeals and upheld the order of the Collector of Central Excise (Appeals), Chandigarh, while setting aside the order of the Collector of Central Excise (Appeals), New Delhi, in favor of the Electricity Board.

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Issues Involved: The classification of coils manufactured by the Electricity Board for the purpose of Central Excise duty.

Classification of Coils:
The issue revolved around the classification of coils manufactured by the Electricity Board, specifically whether the conversion of electric wires into transformer coils constituted a process of manufacture resulting in new products. The Assistant Collector of Central Excise, Amritsar, initially held that the coils were new products different from the raw materials. However, the Collector of Central Excise, Chandigarh, relying on a previous Tribunal decision, concluded that the demand was not sustainable, setting aside the Assistant Collector's orders. This led to the filing of seven appeals by the Collector of Central Excise against these orders. Additionally, the Punjab State Electricity Board filed an appeal against the order of the Collector of Central Excise (Appeals), New Delhi, who had held that the coils were liable to duty, confirming the view of the Assistant Collector of Central Excise, New Delhi.

Argument by Department:
The department argued that the conversion of electric wires into coils should be considered a manufacturing process, emphasizing the complexity of the process compared to other activities deemed as manufacturing. They cited various decisions to support their claim that the coils should be classified as parts of transformers and subject to duty accordingly. The department also contended that marketability, as defined by the Act, was a crucial factor, asserting that the coils were not available as standalone commodities in the market due to their customization for specific transformers.

Argument by Electricity Board:
The consultant for the Electricity Board argued that the issue had already been settled by a previous Tribunal decision, invoking the principle of res judicata. They relied on legal precedents to support their stance that the manufacture did not take place in the conversion of coils. They emphasized the need for the items to be marketable to be considered as "goods" under the Act.

Judgment:
The Tribunal concluded that for an item to be considered "goods" under the Act, it must be marketable, capable of being bought and sold in the market. They highlighted that the coils fabricated by the Electricity Board were used captively and not sold, indicating a lack of marketability. The Tribunal rejected the argument that getting a coil fabricated established marketability, emphasizing that a coil did not exist independently as a marketable commodity but as a part of a transformer. Therefore, the Tribunal dismissed the department's appeals and confirmed the order of the Collector of Central Excise (Appeals), Chandigarh, while setting aside the order of the Collector of Central Excise (Appeals), New Delhi, in favor of the Electricity Board.

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