TaxTMI 
TaxTMI 
2003 (2) TMI 65
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....-2 Aminobatanol Tartrate is also manufactured. 3.The question in these two Appeals is whether excise duty is payable on these intermediate products and whether the Respondents were entitled to the extended period under Section 11A of the Central Excise and Salt Act, 1944. The questions being common in both the Appeals they are being disposed off by this common Judgment. In both the cases it has been held by the CEGAT that the Appellants were liable to pay excise duty and that the claim was not time barred. Before the Orders of the Tribunal are considered it is necessary to set out the law on the subject. 4.In the case of Union Carbide India Limited v. Union of India and Others reported in 1986 (2) SCC 547 the question was whether excise duty was payable on Aluminium cans produced from aluminium. The cans were in a crude and elementary form. By a further process they were then made into torch bodies. It was held that in order to attract excise duty the article must be manufactured and it must be capable of sale to a consumer. It was held that the expression goods in the Central Excise and Salt Act, 1944 only covers an article which can ordinarily come to the market to be bough....
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....ble. 6.In the case of Collector of Central Excise, Baroda v. M/s. Ambalal Sarabhai Enterprises (P) Ltd. reported in 1989 (4) SCC 112, the Respondents were manufacturing Sorbitel. An intermediate product "starch hydrolysate" was manufactured. The department contended that the intermediate product was glucose and excise was payable on it. The question before the Court was whether the starch hydrolysate manufactured by the Respondents was goods within the meaning of Central Excise and Salt Act. It was shown that starch hydrolysate manufactured by the Respondents was highly unstable and fermented if kept for a day or two. On behalf of the department it was submitted that the test was not whether the product was unstable and resulted in fermentation but whether it was capable of being marketed. It was held that goods with unstable character can be theoretically marketed but that one had to take a practical approach. It was held that the evidence showed that hydrolysed starch fermented and decomposed and at higher concentration it crystalised within two or three days. It was held that this was evidence indicating propensity of its not being marketed. It was held that this was good evi....
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....ed to draw back duty under a Notification did not mean that the test of marketability was satisfied. 9.Thus the law is that in order to be excisable, not only goods must be manufactured i.e. some new product brought into existence, but the goods must be marketable. By marketable it does not mean that the goods must be actually bought and sold in the market. But the goods must be capable of being bought or sold in the market. The law also is that goods which are in the crude or unstable form and which require a further processing before they can be marketed, cannot be considered to be marketable goods merely because they fall within the Schedule to the Excise Act. 10.The Appellants have all along contended that the intermediate product manufactured by them are in crude and unstable form. They have shown that the intermediate products manufactured by them have a shelf-life of only a few hours unless and until by a further processing they are purified. In respect of some of the products they have shown that they are in an impure form. They have also filed affidavits of traders to show that some of the products are not marketable. 11.We have seen the Order passed by the Collec....
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....the goods manufactured. In this case, no attempt is made to find out whether any of these products are bought or sold in the market and more importantly it has not been verified, by drawing samples of Appellants' products and getting them chemically analysed, whether their claim is false. It has not been ascertained whether or not Appellants' products are in crude and unstable form and/or whether these products had a shelf life of only a few hours. Mere fact that they are stored in tins or cans for a short period would not ipso facto lead to the conclusion that the products were stable. 14.It is admitted that the Appellants had bought one of the products from the market at one stage. However, they have explained that what was bought was in a purer form and the product they manufacture does not have that purity. It was for the department to check this. The department has chosen not to do so. The burden being on the department it will have to be held that they have not discharged that burden. The Order passed only on the basis that these goods "can conceivably be sold" cannot be sustained in the light of the law which has been set out hereinabove. 15.The Tribunal thereafter has....
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.... the Revenue. After setting out the above mentioned judgment, this Court held that there was scope for belief that there was no need to take out a licence or pay duty at the time of removing dhoop sticks. It was held that the Assessee was not guilty of either fraud or collusion, or wilful misstatement or suppression of fact or contravention of any provisions of the Act and the Rules. It was held that mere failure to pay duty or take out the licence did not amount to fraud, collusion, misstatement, suppression or contravention of provisions of the Act. The argument that failure to take out a licence and taking the goods out of the factory gate without payment of duty was itself sufficient to infer that the Assessee came within the mischief of the proviso, was negatived. 20.In the case of Tamil Nadu Housing Board v. Collector of Central Excise, Madras and Another reported in 1995 (Supp. 1) SCC 50, the Assessee had two manufacturing units one for commercial purposes and another for its own use. The Assessee obtained a licence for the commercial unit but did not obtain a licence for the unit which was for its own use. The Assessee claimed that it had been so advised by somebody in t....