Sabyasachi Mukharji, J. - (1.) This is an appeal under Section 35L(b) of the Central Excises and Salt Act, 1944 (hereinafter referred to as 'the Act'). The appeal is directed against the order dated 2nd November, 1987 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as 'the Tribunal'). The respondent, viz., M/s. Ambalal Sarabhai Enterprises manufacture sorbitol falling under item 68 of the erstwhile Central Excise Tariff. There was a visit to the factory premises of the respondent by the Central Excise Officers on 26th February, 1985. It was alleged that it was found that the respondent manufactured and captively consumed starch hydrolysate but the respondent had failed to take out a licence with reference to the said manufacture of starch hydrolysate and had been removing the same without, according to the appellant, payment of duty and without observing the necessary central excise formalities. It was the view of the revenue that starch hydrolysate was glucose and, therefore, fell under Item I -E of the Central Excise Tariff, which covered glucose in whatever form including liquid glucose. Accordingly, a show cause notice was issued to the respondent. A reply was. filed on behalf of the respondent contending that starch hydrolysate was not "goods" since the same was not marketable and, therefore, no excise duty would be payable on the same. In those circumstances, it was submitted that the proposed adjudication by the Collector following the aforesaid notice was without jurisdiction in view of Section 11 A of the Act. It was urged that starch hydrolysate is not glucose and that even if the same was liable for duty it would not be under item 1-E. According to him, starch hydrolysate was an intermediate product in the manufacture of sorbitol and no duty could be demanded on the same. There were adjudication proceedings thereafter. In the said proceedings, affidavits were filed on behalf of the respondent, witnesses on behalf of the revenue were cross-examined and the Collector also cross-examined the witnesses of the respondent. By an order dated 6th December, 1985, the Collector of Central Excise, Baroda rejected the contention of the respondent. It was held by him that starch hydrolysate was glucose and fell under item 1-F of the Central Excise Tariff and that the respondent had suppressed the fact of manufacture thereof for consumption in the further manufacture of sorbitol. In the premises, he ordered the respondent to pay excise duty amounting to Rs. 34,929,559.55 paise and imposed a penalty of Rs. 10 lakhs. Aggrieved by the said order of the Collector, the respondent preferred an appeal before the Tribunal. The Tribunal by its order dated 2nd November, 1987, being the order under appeal, held that starch hydrolysate manufactured by the respondent is not and never was marketable commodity, and hence that would not be "goods" on which excise duty could be charged. In the premises, the Tribunal allowed the appeal filed by the respondent and set aside the order of the Collector. Aggrieved thereby, the appellant has come up in appeal to this Court under Section 35L(b) of the Act.
(2.) On behalf of the appellant, Shri Ganguly contended that the Tribunal misdirected itself in applying the proper test for the determination of the question. He urged that the true test to determine in a matter of this nature was to consider not only whether starch hydrolysate was actually marketable but also to consider whether conceptually the said goods in question were capable of being marketable. It was urged by Shri Ganguly that the Tribunal had misdirected itself in not appreciating this aspect of the matter and did not as such examine or view the evidence on record in the proper perspective. He urged that in the aforesaid light and in view of the findings made by the Collector, there was no ground for the Tribunal to interfere with the, order of the Collector. He further submitted that in any event, if the Tribunal was not fully satisfied with the evidence on record to determine whether starch hydrolysate were goods in the sense of being marketable, then the Tribunal should have, in the facts and the circumstances of the case and in the interest of justice, remanded the matter back for appraisement and examination in the light of the true principle or the tribunal should have examined or called for the fresh evidence to determine this question. The Tribunal not having done so, has failed to render justice and as such the order of the Tribunal is bad, according to Shri Ganguly. Shri Ganguly further submitted that in starch hydrolysate the percentage of dissolved solids present is 64. It was submitted that the criterion laid down in the IS Specification for liquid glucose or glucose syrup, the two terms are being used synonymously by the Indian Standard Institution, was not satisfied in this case. The IS Specification defines liquid glucose or glucose syrup as "a refined and concentrated non-crystallizable aqueous solution of glucose, maltose and other polymers of glucose, obtained by controlled hydrolysis of starch containing material." The United States Pharmacopoeia XIX describes liquid hydrolysis of starch, consisting chiefly of dextrose, dextrins, maltose and water and in these circumstances and in view of the components and the dictionary meaning as discussed by the Tribunal in its order, it is urged that it cannot be said that the said goods is the same thing as glucose or glucose syrup. In the premises, it was contended that the Tribunal has not considered this aspect of the matter.
(3.) We are concerned in this appeal with starch hydrolysate and, therefore, if the process or activity of the assessee brings into existence an article different and distinct from what it was before the process and a new identifiable article known in the market as such comes into being, then the use of such starch hydrolysate captively would attract duty on the part of the assessee even in captive consumption. It is not in dispute as the Tribunal noted in the instant case that starch is hydrolysed by the respondent. The operation of hydrolysis, it is contended, results in ,bringing into being starch hydrolysate which is utilised in the manufacture of sorbitol. The question is whether starch hydrolysate is "goods". The case of the respondent was that the starch hydrolysate being wholly unstable and quickly fragmented and losing its character in a couple of days, the same could, therefore, neither be stored nor marketed. In the premises, it was the case of the respondent that starch hydrolysate was not marketable product and would not, therefore, be "goods" on the manufacture of which excise duty could have been demanded or would have been payable and, therefore, for non-payment of duty, there has been no negligence or failure on the part of the respondent and as such Section 11 -A of the Act was not applicable. In this connection, it would be instructive to refer and it would be necessary to rely on the principles laid down by this Court in South Bihar Sugar Mills Ltd. v. Union of India (1968) 3 SCR 21. There, the appellant companies manufactured sugar by carbonation process and paid excise duty on sugar manufactured by them under Item 1 of Schedule I to the Act. According to one affidavit filed on behalf of the respondents, filed in those proceedings, these manufacturers employed a process of burning lime-stone with coke in a lime kiln with a regulated amount of air whereby a mixture of gases was generated consisting of carbon dioxide, nitrogen, oxgen and a small quantity of carbon monoxide. The gas thus produced was thereafter compressed so as to achieve pressure exceeding atmospheric pressure and then passed through a tank containing sugarcane juice so as to remove impurities from it and to refine the Juice. For that process of refining it was only the carbon dioxide in the gas which was used and the other gases, i.e., nitrogen, oxygen and carbon monoxide escaped into the atmosphere by a vent provided for the purpose. The carbon diozide content in this mixture of gases ranged from 27 to 36.5%. Similarly, another company manufactured soda ash by solvay ammonia soda process for which also carbon diozide was required and this was produced by the petitioner therein by burning lime-stone with coke in a kiln in the same manner as the appellant sugar manufacturing companies employing the carbonation process. The respondents therein regarded all the companies as manufacturers of compressed carbon dioxide and levied excise duty on them under Item 14-H in Schedule I to the Act. Writ petitions were filed in the High Court challenging the validity of the excise duty but the same petitions were dismissed. It was contended, inter alia, on behalf of the appellants therein that the lime kiln was maintained to generate a mixture of gases and not carbon dioxide and at no stage in the process of generating this mixture and passing it through the sugarcane juice was carbon dioxide - which formed one of the contents of the mixture - either compressed, liquidified or solidified. The mixture of gases so generated was not carbon dioxide as known to the market nor was it according to the specifications laid down by the Indian Standards Institution which required the carbon dioxide content to be at least 99%. It was, therefore, contended that the excise duty sought to be recovered on the content of carbon dioxide in the mixture of gases could not fall under Item 14 - H. It was further contended that the duty being on goods it could be charged only on goods known as carbon dioxide in the trade and marketable as such. As is evident from the said narration of facts the contentions urged were more or less similar to the contentions involved in the instant appeal before us. It was held by this Court that the gas generated by the appellant companies was kiln gas and not carbon dioxide as known to the trade, i.e., to those who dealt in it or who used it. The kiln gas in question, therefore, was. neither carbon dioxide nor compressed carbon dioxide known as such to the commercial community and therefore, could not attract item 14 -H in the First Schedule. This Court reiterated at page No. 31 that the Act in question charges duty on manufacture of goods. The word "manufacture" implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must emerge having a distinct name, character or use. The duty is levied on goods. As the Act does not define goods, the legislature must be taken to have used that word in its ordinary, dictionary meaning. The dictionary meaning of the expression is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market. It would be such an article which would attract duty under the Act. This Court referred to the previous decision in the case of Union of India v. Delhi Cloth and General Mills Ltd. (1963) 1 Suppl. SCR 586. Therefore, in this instant appeal, in order to determine whether starch hydrolysate was "goods" or not, it is necessary to determine whether there was any application of process to the raw materials and as a result of that application there emerged new and different article having a distinctive name, character or use and the resultant product being goods in the sense of being marketable or marketed. In this connection, Shri Soli Sorabjee referred us to the observations of this Court in Union Carbide India Ltd. v. Union of India. (1986) 24 ELT 169. There, this Court reiterated that in order to attract excise duty the article manufactured must be capable of being sold to a consumer. Entry 84 of List I of Schedule VII to the Constitution specifically speaks of "duty of excise on tobacco or other goods manufactured or produced in India" and it is now well accepted that excise duty is an indirect tax, in which the burden of the imposition is passed on to the ultimate consumer. This Court held that in that context, the expression "goods manufactured or produced" must refer to articles which are capable of being sold to a consumer. To become "goods", an article must be something which can ordinarily come to the market to be bought and sold. The Court found in that case that aluminium cans prepared by the appellants therein were employed entirely by it in the manufacture of flash-lights and were not sold as aluminium cans in the market. It also appeared from the records that aluminium cans at the point of levy of excise duty existed in a crude and elementary form which were incapable of being employed as a component in a flashlight. These cans had sharp uneven edges and in order to use them as a component in making flash-light cans, these cans had to undergo various processes such as trimming, threading and redrawing. After that these were reeded, beaded and anodized or painted, it was at that point only that these became distinct and complete component capable of being used as flash-light cans for housing battery. cells and having a bulb fitted to the can. This Court noted that it was difficult to believe that the elementary and unfinished form in which these existed immediately after extrusion sufficed to attract a market. The assertion of the appellant on affidavit that aluminium cans were unknown in that form in the market had hot been proved to the contrary by any satisfactory material by the respondents therein. This Court further found that not a single instance had been provided by the respondents demonstrating that such aluminium cans had a market. The conduct of the appellants in the past, having regard to the circumstances of the case, would not serve as evidence of the marketability of the aluminium cans, it was in that case. This Court noted that record disclosed that whatever aluminium cans were produced by the appellants were subsequently developed by it into a completed and perfected component for being employed as flash-light cans. In those circumstances, the aluminium cans produced by the appellants were not liable to excise duty under section 3 of the Act read with Item 27 of the Central Excise Tariff.;