TaxTMI 
TaxTMI 
1994 (9) TMI 168
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.... the evidence on record in order to determine the question whether the said products were marketable commodities. The High Court judgment clearly states that the revisional authority did not deal with the question as to whether rough rolled flat forms were marketable commodities or not. The High Court also did not enter into the question whether the said products were marketable commodities or not in view of the decision of a Division Bench of the Allahabad High Court in Union of India v. Union Carbide India Ltd. reported in 1972 A.L.J. 451. We find that the said judgment of the Allahabad High Court has been reversed by this Court in Union Carbide India Ltd. v. Union of India & Ors. (reported in 1986 (2) SCC 547). In these circumstances, we set aside the impugned order and remand the case to the Customs, Excise and Central Excise Gold (Control) and Appellate Tribunal (CEGAT) to examine the evidence on record and determine whether the products in question are marketable commodities. It is clarified that the Tribunal will determine this question on the basis of evidence already on record and neither party will be permitted to lead further evidence." 2. Tribunal is required to....
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.... For Geep Flashlight Industries Ltd. Sd/- R.P. Agrawal Secretary and C.A." (c) Affidavit of Shri K. Sethi, Assistant Collector of Central Excise filed alongwith a miscellaneous application dated 24-10-1978 on the same day on which High Court of Allahabad heard the writ petition of the appellant herein and reserved judgment after hearing, without passing any order on the said miscellaneous application. He (SDR) submits that the Misc. Application is on `record' of the High Court and therefore, Tribunal is bound to consider this as evidence in support of marketability of the `disputed goods' as `zinc sheet'. He relied on the definition of the word `record' in Mukerjee's Law Lexicon 1989 Edition at page 539 which states as follows :- "Anything entered on the rolls of the Court " He also relies on 1992 (61) E.L.T. 521 (Mohan Lal Shamji Soni v. U.O.I. Relevant extracts from the affidavit dated 24th Oct. 1978 of Shri K. Sethi alongwith annexures thereto are reproduced below :- "1. That the deponent is the Assistant Collector, Central Excise, Allahabad and is as such well conversant with the facts of case deposed to below. 2. That one of the mai....
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.... These are also reproduced below :- (i) Assistant Collector "I have gone through their representation carefully and the arguments advanced therein and also having heard them through their representative Shri R.P. Agarwal on 9-2-1973. I am of the view that M/s. Geep Flashlight Industries Ltd. Allahabad are actually manufacturing zinc sheets as defined under Tariff Item No. 28B (2) which reads as follows :- "Manufactures, the following namely, plates, sheets, circles, strips and foils in any form or size". (ii) Appellate Collector "As already mentioned above the rough zinc slabs received after they are melt are subjected to a process of rolling. These are rolled about 5 times to bring them to the proper dimensions. Under the circumstances it cannot be disputed that they undergo a process which is carried out for the manufacture of an excisable product. Sec. 3 of the Central Excises and Salt Act, 1944, prescribed that there shall be levied and collected in such manner as may be prescribed duties of excise of all excisable goods which are produced or manufactured in India at the rate set forth in the first schedule. Under item 26B of the Central Excise Tariff being the s....
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....ifference and this will be immaterial for its liability to duty. The court, therefore, held that the test of general marketability of the goods does not appear, to be sound and could not be accepted. Under the circumstances the appellants' contention that the rough unfinished sheets/strips manufactured by them as an intermediate product which was not capable of being marketed did fall within the scope of tariff item 26B(2) of the Central Excise Tariff and has no force and the rolled zinc sheets/strips manufactured by them are liable to pay duty at the appropriate rate prescribed." (iii) Govt. of India "Manufactures, the following namely, plates, sheets, circles, strips and foils in any form or size. The expression in any form or size is very wide and includes plates, sheets, strips etc. in any form or size. The petitioners' contention that sheets manufactured by them are not sheets as per IS specification since these are not free from all defects is rejected on the ground that the Central Excise Tariff does not make any distinction between sheets which are free from all defects and others. Their contention that as BTN wrought products and semi-manufacture and should be treate....
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....ted the contents of the authenticity of the letter but has attempted to explain that the term `zinc sheet' used therein was a lease repetition of the description of the product as used by the Central Excise Department. We are, however, of opinion that on the admission of the petitioner itself it is clear that the product described as flat form of `Zicee' by the petitioner is one which is known as `Zinc sheet' to a manufacturer of dry cell batteries and is a product which can be held to be known as `zinc sheet' to the trade to which the petitioner belongs. It is not necessary for us, therefore, to go into the evidence adduced by the parties in these proceedings and thereafter to pronounce upon the question as to whether the product of the petitioner can be treated to be `zinc sheets' or `strips' as known to the general market." 4.1 The appellant has relied upon the following evidences, regarding non-marketability of the disputed product as `zinc sheets' (a) Affidavit dated 7-3-1975 of Dinshaw Sorabji Relevant extracts are reproduced below :- "............................................................................................................................ ....
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....nd (c) with neither clean nor smooth but with scratched, blistered and uneven surface. (d)  These rough rolled flat-forms are fed into punching presses in same uneven and un-uniform rough form in which they come out of the rolling press, without any trimming or finishing process, and without bringing them into any standard shape and size. (e) For these reasons, some of the callots punched out from these rough rolled flat-forms varied in thickness and consequently CONTAINED VARYING QUANTITY OF THE METAL. (f) The cans varied in length to some extent from one another, and this varying length of cans is due to varying thickness of callots, which in its turn, is due to corresponding varying thickness in the surface of the rough rolled flat-forms, both (a) in respect of each flat-forms and (b) in respect of one flat-form as compared to another. (g) Out of the rough rolled flat-forms produced in this manner that 10 pieces at random were picked up by the deponent (being Engineer-in-Charge of Zinc Section) and their variations, inter se, had been furnished in the statement. 8. That the deponent asserts that the ten sample pieces of rough rolled flat-forms ....
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....th) and smooth and even surface on both sides. (b) the rough rolled flat-forms of zinc remain in the form of `zinc' only during and after the stage of rolling and are only a lengthened and flattened form of zinc ingot. They cannot be bought or sold into the market as "zinc sheets", and can only be dealt/disposed of as `zinc'. (c) the aforesaid rough rolled flat-forms of zinc constitute only a transitory and intermediary steps or "in process material" in the course of manufacture of zinc cans for dry cell battery which is the ultimate finished manufactured product, or a "semi-manufacture", but not in any case a "manufacture of zinc sheet" in commercial or technical sense or within the meaning of Item 26B(2) of the Central Excise Tariff. Dated 7-3-1975 Sd/- DEPONENT I, the above-named deponent, do hereby verify that the contents of paragraphs 1 to 12 are true to my personal knowledge, which I believe to be true, that no part of this affidavit is false and nothing material has been concealed herein. So help me God. Dated 7-3-1975 Sd/- DEPONENT [Emphasis supplied by the ld. Advocate] (b) Affidavit dated 5th April, 1978 of ....
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.... his dry battery production. 9. I say that this rough rolled zinc is not known to the market and is not a commodity which is bought and sold in the market and is not zinc sheet and strip is known to the market. 10. For production of zinc sheet/strip known and bought and sold in the market the rough rolled zinc is further rolled with the aid of more precise machinery called finish rolling, thereafter the material successively passes through slitting, shearing, levelling, trimming and polishing operations, depending upon the end- product, to ensure that the finish product known as zinc sheet/strips meets the exact specifications/standards and tolerances. Without these additional steps after rough rolling, the rough rolled zinc does not reach the stage of zinc sheets/strips known and bought and sold in the market. 11. I say that the rough rolled zinc as such having jagged, uneven edges and varying widths is not known to the market and is not bought and sold in the market as a recognised independent commodity as zinc sheet/strip. It has no distinctive use except as in process material in the manufacture of other intermediate products for ultimate manufacture of ....
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....eral market" is neither binding on the Tribunal nor a valid finding on the question before the Tribunal for the following reasons :- (a) Supereme Court's direction dated 13-11-1992 has categorically held that none of the authorities below has examined the question of marketability and for this reason has directed the Tribunal to determine the question. Therefore, findings of all authorities and any observations whatsoever by any authority below the Supreme Court in the proceedings on this subject matter get aside. (ii) Allahabad High Court has fallen into the same error of making a distinction between `general marketability' and `special or limited marketability' in this case which it had committed in its judgment in the case of marketability of aluminium cans in the matter of UOI v. Union Carbide India Ltd. - 1978 (24) E.L.T. (J 1) (All.) resulting in over-ruling of its opinion by the Apex Court [1986 (2.) E.L.T. 169 (SC)] in Civil Appeal filed by the Union Carbide India Ltd. It is this error which has impelled the Appex Court to send the matter to the Tribunal for determining the question of fact, namely, marketability of the disputed product as `zinc sheet'. 5....
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....e Tribunal because the High Court did not pass any order allowing the misc. application, nor considered the said additional evidence in its judgment, nor could it be legally considered without giving the appellant/petitioner an opportunity to rebut the said additional affidavit evidence of K. Sethi, Asstt. Collector of Central Excise. In the aforesaid facts and circumstances, I am of the view that the said evidence cannot be considered to be on record of High Court of Allahabad and therefore, the Tribunal cannot consider the same in these proceedings in view of the prohibition placed by the Apex Court in its direction dated 13-11-1992 regarding consideration of fresh evidence by the Tribunal. 7.2 I am also inclined to agree with the submissions of the learned advocate, Shri V. Sridharan as set out above regarding the findings of Allahabad High Court on `marketability' of the disputed product. If the findings of Allahabad High Court on the question of marketability of the disputed product had been considered adequate, Hon'ble Supreme Court would not have directed the Tribunal to determine this question over and above the High Court. Supreme Court, itself, would have determin....
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....e emphasised that they are the only two manufacturers of torches in this country. They have repeatedly stated that no one else produces aluminium cans or torch bodies, because this article is exclusively usable for manufacturing flashlights. The companies do not deny that the aluminium cans are a necessary intermediate product in the manufacture of torches. In the trade of torch manufacturers, this product is well-known and well-used, because no torch can be manufactured without these cans. This product may not be known to the general public or to the traders in general it is known and used by that trade which makes torches." This judgment of Allahabad High Court was reversed by Supreme Court in 1986 (24) E.L.T. 169 (SC), (supra) on analogous evidence namely crude aluminium cans, admission by the manufacturer, limited marketability to Torchlight manufacturers, as in the instant case. Reliance placed by the learned SDR on HUF Ramlal Mansukhrai and Oriental Timber, (supra) have no relevance because question of `manufacture' was involved in those cases and not the question of `marketability'. Although I have held that K. Sethi's affidavit dated 24-10-1978 cannot be considered, even....
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....whether these documents should have been taken or not. It was left to the appellants to have made a grievance regarding it before the Hon'ble Supreme Court. They have obviously not done so. It is now too late for the ld. Advocate to raise this issue. The Hon'ble Supreme Court having referred the matter to the Tribunal to consider the `evidence on record' it implies that all the evidence, which was before Hon'ble Allahabad High Court has to be seen by us. 11. There are number of letters of the appellants written to the department by which they have referred to the impugned goods as zinc sheets or plates. They are as follows : (i) Letter dated 19-9-1974 written by the Secretary of the Petitioner Company to the Superintendent of Central Excise, Allahabad in which the petitioner had itself acknowledged that it had sent zinc slabs produced immediately after the melting stage to a rolling mill and got them rolled into zinc sheets there for use in the factory for production of zinc callots. This letter had been produced by Shri Sethi, Asstt. Collector of Central Excise alongwith his counter affidavit before the Hon'ble Allahabad High Court. The Hon'ble Allahabad High Court....
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.... (v) Affidavit of Shri R.P. Mathur, Asstt. Collector of Central Excise at page 231 of Paper Book who has stated that large number of industrial units manufacturing dry cells which do not manufacture zinc slabs themselves purchase them for manufacturing callots. There is no counter to this assertion from the assessee in this affidavit. (vi) The evidence relied by the assessee in the nature of the affidavit of Shri Natarajan Sreenivasan at page 267, of the paper book also does not emphatically deny that the use of the impugned product in the manufacture of callots either by Union Carbide or by assessee or by any other battery manufacturer. (vii) In the affidavit of Shri Dinshaw Sorabji, it is admitted that the rough rolled flat-forms are produced after five successive rollings on the rolling press and a different product is obtained with different name and having a different use. The only assertion that it does not satisfy ISI vide IS : 2258 : 1977. However, the ld. Collector (Appeals) has given a detail finding as to how the ISI Specification is not necessary. However, the ld. Collector has also referred to the ISI specification and nomenclature, Chapter 79 un....
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....his affidavit of Sethi and telex message has to be accepted as evidence. 14. The only contention of the assessee is that the impugned goods are not in zinc sheets within the category of description of items under Tariff Item 26B(2). They do admit that it is an intermediate product which is consumed inside the factory. It also admitted that Union Carbide and other battery manufacturers are manufacturing these sheets and also buying from outside. Admittedly, the assessee is also buying and getting it made from rolling mills from outside. The question is as to whether this has to be considered as zinc sheets or not. The assessee has attempted to show that product does not satisfy the ISI specifications. Further, it is noticed as per the findings of the Collector (Appeals) that the size of the zinc sheets manufactured by the assessee are more or less similar to ISI standards. The assessee has not produced any certificate from ISI to show that this product is not satisfying to its specifications. Moreover, in the case of Wetoco v. Collector of Central Excise - 1992 (62) E.L.T. 584 relying on earlier Supreme Court judgment, it has been held that ISI specification is meant for ens....
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....e erstwhile tariff as in the case of Union of India v. Babu Bhai Nyalchand Mehta as reported in - 1991 (51) E.L.T. 180 as well as in the case of Laminated Packages Pvt. Ltd. v. Collector of Central Excise - 1990 (40) E.L.T. 326. The larger bench in the case of Guardian Plasticote Ltd., Calcutta v. Collector of Central Excise & Others - 1986 (24) E.L.T. 542 (Tri.) analysed the tariff Item 17 dealing with the paper, all sorts and held Bituminized paper also to be coming in the category of paper. In the case of LML v. Collector of Central Excise - 1991 (51) E.L.T. 434, the Tribunal held that yarn or multi-filament yarn captively consumed by the assessee was dutiable under Item 18-11(1)(a) of erstwhile duty. In this case also the assessee contended that they were not selling the goods. The Bench held that the propensity of the goods being marketed is determinable factor and on various other grounds held it to be dutiable. 15. Therefore, it follows that the appellant having captively consumed these items and the fact that the item is being used by the dry battery cell manufacturers clearly indicated that the same can come within the category of "zinc sheets in all forms or size"....
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....order proposed by the learned Member (J), the learned Counsel submitted that the word "thereafter" occurring in the High Court's order as quoted by the Member (J), would appear to be an improbable inference. The learned Counsel contended that once the hearing is over no further evidence can be produced and relied upon the Supreme Court decision Jain Exports Pvt. Ltd. v. Union of India, reported in 1993 (66) E.L.T. 537. Simply because it has been filed, it will not form evidence on record but the documents have to be admitted by the Court. See AIR 1961 Patna 242. The learned Counsel further argued that their letter of 19-9-1974 cannot be used against the appellants because this letter has been referred to by the High Court whose order has now been set aside by the Supreme Court. The rough rolled zinc called by the Department as zinc sheet is the description used in their Central Excise Licence and classification list. Therefore the reference to zinc sheet in this letter is only a term used by the Department. The question to be decided is whether the condition in which the goods emerged in their factory whether the goods are marketable in that condition. The contents of their letter ....
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....nded that what the appellants are doing is to punch out callots from the rough rolled zinc sheets, for which purpose, it is not necessary that the sheets should be fine finished. The learned Departmental Representative referred to the affidavit of Natarajan Sreenivasan and urged that it is giving the quality of zinc sheets required for making articles for use of the house-hold purposes and is not relevant when we are considering the sheets that are required by a battery manufacturer for making callots in the manufacture of batteries. The mere fact that such sheets are not fit for use of domestic purposes will not take it out of the coverage of 26B(2) of Central Excise Tariff. The learned Senior Departmental Representative argued that their letter of 19-9-1974 is crucial evidence indicating the capability of the goods to be marketed. It shows clearly that there are rolling mills which can produce the goods and that these sheets after rolling are excisable goods on which duty is to be paid. The Senior Departmental Representative contended that in this context that the fact that the appellants did not actually send the material to the other rolling mills is irrelevant for the purposes....
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....action is invoked. In the present case, the learned Senior Departmental Representative pointed out that the High Court has not chosen to go into the evidence adduced by the parties before it, in the view the High Court had taken on the issue. Further, the learned Senior Departmental Representative pointed out that the provisions of Civil P.C. for evidence is not applicable for Writ proceedings in the High Court. These are guided by the rules of the High Court. He relied upon the case of Radha Krishna and another v. The State of Rajasthan and others, reported in AIR 1977 Rajasthan 131. Rule 8 of the Allahabad High Court Rules makes it clear that all questions will be decided on the basis of the affidavits. In the affidavit filed by Shri Sethi, there is clear evidence that the rough rolled zinc sheets produced by the appellants is marketable. This has been obtained on a specific enquiry made in this regard. On the classification of the goods, the learned Senior Departmental Representative submitted that Sub Item (2) of Item 26B Central Excise Tariff covers sheets, strips, foils in any form or size. The description of the product in the present case and the process of manufacture avai....
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....er the products in question are marketable commodity. The Supreme Court further clarified that the Tribunal will determine this question on the basis of evidence already on record and observed that neither party will be permitted to lead further evidence. The order of Hon'ble Member (T) Paras-3 and 4.1 has listed out the evidence relied upon by both the parties in this regard. Further, the evidence in the shape of an affidavit of Shri Sethi, Assistant Collector of Central Excise filed on 24-10-1978 on which date the High Court heard the Writ Petition and reserved the judgment, is now involved in a controversy as to whether this affidavit can be taken as evidence on record. Elaborate arguments have been addressed by both sides on this issue. Examining this issue, it is seen that in the proceedings before the High Court, there is some indication as to the procedure by which the High Court allows additional evidence to be taken on record. It is found in respect of an application dated 17-4-1978 for taking on record the affidavit of Natarajan Sreenivasan a specific application was moved, notice was given to the other side, the other side filed a counter affidavit and thereafter the Hig....
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....tained from rolling mill by getting the same manufactured therein. This letter goes to establish the version of the respondents that the flatforms manufactured by the petitioner as an intermediate product during the process of manufacture of dry cell batteries in its factory, are such which are known as a sheet to the manufacturers of dry cell batteries and can be obtained by getting the same manufactured from another factory. In this rejoinder affidavit to the counter affidavit of Shri K. Sethi with which the aforesaid has been appealed as an annexure, Sri Tapas Malik Works Manager of the Battery Unit of the petitioner company has not disputed the contents or the authenticity of the letter, but has attempted to explain that the term "zinc sheet" used therein was a loose repetition of the description of the product as used by the Central Excise Department. We are however, of opinion that on the admission of the petitioner itself it is clear that the product described as flatform of by the petitioner is one which is known as `zinc sheets' to a manufacturer of dry cell batteries and is a product which can be held to be known as `zinc sheet' to the trade to which petitioner belongs." ....
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....cise, Hyderabad, reported in 1994 (70) E.L.T. 33 (SC) = 1994 (53) ECR 349 (SC) is of significance. The Supreme Court observed therein that the requirement of marketability has been evolved by a process of judicial interpretation and the Supreme Court went on to note the relevant decisions of the Supreme Court in this regard namely :- 1. Union of India v. Delhi Cloth & General Mills & Others - 1977 (1) E.L.T. (J 199) (SC) = 1990 (27) ECR 151 (SC) 2. South Bihar Sugar Mills Ltd. Etc. v. Union of India and Others - 1978 (2) E.L.T. (J 336) (SC) = 1989 (25) ECR 447 (SC) 3. The Union Carbide India Limited v. Union of India and Others - 1986 (24) E.L.T. 169 (SC) = 1986 (7) ECR 217 (SC) 4. Bhor Industries Ltd., Bombay v. Collector of Central Excise, Bombay - 1989 (40) E.L.T. 280 (SC) = 1989 (21) ECR 273 (SC) 5. Collector of Central Excise, Baroda v. Ambalal Sarabhai Enterprises - 1989 (43) E.L.T. 214 (SC) = 1989 (24) ECR 433 (SC) Paras 9 and 10 of the Supreme Court are important. The following observations have been made in the later part of para-9 :- "This Court observed that while even transient items of articles can also be goods, one has to....
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....of buyers will also be not material applying the criteria already laid down by the Supreme Court in the above decisions. The evidence on record is, therefore, sufficient in the facts and circumstances of this case to hold that the rough rolled zinc sheet is marketable. It may be useful to recall in this regard that the Supreme Court observation in the case of Collector of Central Excise v. Ambalal Sarabhai Enterprises, reported in 1989 (43) E.L.T. 214 (SC), the propensity of the goods to be marketed, is also relevant factor and further the contents of the appellants own letter of 19-9-1974 shows that the rough rolled zinc sheets is not so very transient because they have stated that they have already arranged to get the zinc slabs rolled into sheets from another rolling mill, get them back on payment of duty and thereafter to store the sheets for subsequent issue for punching callots. Surely, the appellants would not have made all these arrangements without first examining the technical feasibility thereof for which they do have sufficient expertise. This also brings out the propensity to the goods for being marketed. Having come to this conclusion, the description of Tariff Item 2....