TaxTMI 
TaxTMI 
1978 (2) TMI 205
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the removal of the article chargeable to duty from the factory or any other premises of manufacture or production for delivery at the place of manufacture or production. (4) "Factory" is defined by section 2(e) to mean any premises, including the precincts thereof, wherein or in any part of which excisable goods are manufactured subject to any manufacturing process connected with their production. 2.  We are concerned with the Act and the Rules as they existed from 1-3-1970 when the goods produced by the petitioner became liable to duty on the insertion of entry 14AA in the First Schedule to the Act to 30-9-1975 when the Act was amended. The existing clause (b) of sub-section (1) of Section 4 of the Act is not, therefore, applicable to this case. Similarly, the residuary entry 68 making assessable to duty all other goods not elsewhere specified, manufactured in a factory but not excluded by the said item is also not applicable. 3. The undisputed facts are that the petitioner used to manufacture calcium carbide and sell the same till 1967. In the petitioner's factory various chemicals are manufactured by separate plants. There is an independent plant in w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y and collection of such duty on it. The petitioner, therefore, by this writ petition prays to get those orders quashed. 6. The Union of India has opposed the writ petition on the ground that what is manufactured by the petitioner is calcium carbide a mentioned in tariff entry No. 14AA of the First Schedule to the Act and as such is liable to ad valorern duty. This product was actually sold in the market till 1967 by the petitioner and even thereafter is "goods within the meaning of the Act. The applicability of the Calcium Carbide" Rules to this product does not arise as the petitioner does not transpore the Calcium Carbid, but uses the entire production for captive consumption in its factory. The packaging of the calcium carbide is not relevant in the present case as the entire calcium carbide production is used by the petitioner for the manufacture of acetylene gas. Compliance with the Carbide of Calcium Rules in respect of this product by the petitioner is not a condition precedent for the product to become excisable. At any rate, excise duty is levied on manufacture and not on sale. Calcium carbide of the like kind and quality is sold or is capable of being sold and is....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the Indian Standards Institution. The gas yield of calcium carbide is given at page 5 of the booklet issued by the Indian Standards Institution. The respondents point out that the calcium carbide produced in the molten form is solidified and broken into cakes for use in the acetylene gas plant. The petitioner has four generators for acetylene gas, two of which are small and the other two are very big. The small generators are fed with calcium carbide of 1-80 mm size, while the bigger ones are fed with calcium carbide of 80-250 mm size. The petitioner points out in the rejoinder that on the pleadings of the respondents themselves 74 per cent of the production of the so-called calcium carbide of the petitioner is not commercially pure as per the Indian Standards Institution specifications. This would mean that the substance produced by the petitioner is sub-standard judged from the Indian Standards Institution specifications. This would, however, not necessarily make it unmarketable. The marketability would itself depend on the degree by which the product falls below the standard. It is not possible to lay down a hard and fast line as to when a sub-standard product becomes mar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the contemplation of the framers of these Rules that the calcium carbide which does not comply with the requirements of Chapter III of the Rules as to its marketability can nevertheless be used for the generation of acetylene gas. Calcium carbide is used as an intermediate product or material which may not be otherwise marketable for the generation of the acetylene gas. (2) The second question is whether an article of the like kind and quality, as the product of the petitioner, is sold or is capable of being sold within the meaning of Section 4. Before Section 4 of the Act can be applied to the product of the petitioner, it has to be seen that an article of the like kind and quality is sold or is capable of being sold within the meaning of Section 4. Since the duty on this product is ad valorem, its value has to be found under Section 4. In the present case, it cannot be done unless it is shown that the product is sold or is capable of being sold. It is not disputed that after 1967 this product by the petitioner is not sold. The question is whether an article of the like kind or quality is sold or is capable of being sold. The words "of the like kind and quality" are importan....