1978 (2) TMI 205 - HC - Central Excise

Summary

Issues Involved:
1. Whether the calcium carbide produced by the petitioner is "goods" within the meaning of the Act.
2. 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.
3. Whether the assessable value of the product can be determined under Section 4.
4. Whether the product is removed from the factory within the meaning of the Act and Rules.

Summary:

1. Whether the calcium carbide produced by the petitioner is "goods" within the meaning of the Act:
The court examined whether the calcium carbide produced by the petitioner qualifies as "goods" by considering its material, economic, and legal aspects. It was noted that the calcium carbide produced did not comply with the Indian Standard Specification for Calcium Carbide and was not commercially pure. The court concluded that the product did not meet the requirements of the Carbide of Calcium Rules, 1937, and thus was not marketable or "goods" within the meaning of Section 3 of the Act.

2. 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:
The court noted that the product was not sold after 1967 and was not capable of being sold due to its non-compliance with the Carbide of Calcium Rules. The court emphasized that the product did not attain the material form and composition required for marketability and was not economic goods, thus not capable of being sold within the meaning of Section 4.

3. Whether the assessable value of the product can be determined under Section 4:
The court highlighted that the value of the product must be determined at the time of its removal from the factory. Since the calcium carbide was used within the same factory for generating acetylene gas and was not removed from the factory, the point of time for determining its value under Section 4 was not reached. Consequently, the question of levy and collection of duty did not arise.

4. Whether the product is removed from the factory within the meaning of the Act and Rules:
The court referred to the definition of "factory" u/s 2(e) and concluded that both the calcium carbide plant and the acetylene gas plant were part of the same factory. Since the product was not removed from the factory, the conditions for levy and collection of excise duty u/r 9 and 49 were not satisfied.

Conclusion:
The writ petition succeeded, and the impugned orders of the Superintendent, dated 5th January 1972, the Appellate Collector, dated 25th November 1972, and the Central Government, dated 16th September 1975, were quashed. There was no order as to costs.