R.C. Lahoti, J. - (1.) The respondents are engaged in the manufacture of insecticides, fungicides, weedicides and pesticides falling under Tariff sub-heading 3808.10 and excisable thereunder. During the process of manufacturing Mercuric Acetate (MA), Para Chloro Phenyl Valeric Acid (PCA), and Chloro Synthemic Acid Chloride (CSA Chloride) came into existence as intermediate products. The Collector of Central Excise passed orders of adjudication holding the abovesaid three intermediate products liable to payment of excise duty. The respondents preferred appeals before the Collector (Appeals) who has allowed the appeals exonerating the said three intermediate products from levy of excise duty. The appeals preferred by the Revenue against the order of Collector (Appeals) have been dismissed by a common order by the CEGAT. The aggrieved Revenue has come up by filing these appeals to this Court.
(2.) It is well settled by a series of ponouncements of this Court from Bhor Industries Ltd. v. Collector of Central Excise, (1989) 40 ELT 280 (SC) to Union of India v. Delhi Cloth and General Mills Co. Ltd., (1997) 92 ELT 315 that excise is a duty on goods as specified in the Schedule. The taxable event in the case of excise duty is the manufacture of goods. In order to be excisable goods (i) there must be goods (ii) having come into existence as a result of manufacture, and (iii) to be goods, the article must be known to the market as such and as would ordinarily come to the market for being bought and sold. Actual sale of the article is not required but it must be capable of being bought and sold. Intermediate products even if captively consumed may be liable to levy of excise duty if they satisfy the test of being goods on the touchstone of marketability. In Union of India v. Delhi Cloth and General Mills Co. Ltd., (1997) 92 ELT 315 the following statement of law from Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad, (1995) 76 ELT 241 has been reaffirmed:- "The duty of excise being on production and manufacture which means bringing out a new commodity, it is implicit that such goods must be usable, moveable, saleable and marketable. The duty is on manufacture or production but the production or manufacture is carried on for taking such goods to the market for sale. The obvious rationale for levying excise duty linking it with production or manufacture is that the goods so produced must be a distinct commodity known as such in common parlance or to the commercial community for purposes of buying and selling." (Underlining by us)
(3.) Though the intermediate goods so coming into existence may be specified in the Schedule as excisable they would not be subjected to duty unless they satisfy the test of marketability. In the case of Delhi Cloth and General Mills Co. Ltd. (supra) the intermediate product was calcium carbide, which initially produced in the form of cakes, was broken into smaller pieces after the cakes attained room temperature and the broken pieces were forthwith put into use for the production of acetylene gas. The Appellate Collector had found that the calcium carbide which was sold in the market was packed in airtight containers and conformed to ISI specifications which the intermediate products of DCM did not. Their Lordships held that as the calcium carbide manufactured by the DCM for further utilisation in the production of acetylene gas was not of a purity that rendered it marketable nor was it packed in such a way as to make it marketable, that is to say, in airtight containers it was not excisable on the ratio of Moti Laminates. As held in Collector v. Amba Lal Sara Bhai Enterprise, (1989) 43 ELT 214 onus to establish that an article is "goods" and marketable, is on the department.;