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Issues:
1. Whether the petitioner is liable to pay excise duty on carded gilled sliver under Tariff Item No. 43. 2. Whether the carded gilled sliver is capable of being sold to a consumer. 3. Interpretation of relevant judgments by the Supreme Court regarding excise duty on goods. Analysis: Issue 1: The petitioner, a partnership firm, purchased a wool spinning plant and is manufacturing woollen yarn similar to the previous owner. The Excise Authorities demanded excise duty on carded gilled sliver under Tariff Item No. 43. The petitioner argued against this duty based on a previous judgment by Suresh, J. in a related case. The petitioner contended that carded gilled sliver is an intermediate product in the manufacturing process of woollen yarn, incapable of being sold or removed from the factory premises. The petitioner relied on the principle that goods incapable of being sold to a consumer are not subject to excise duty under the Excise Act. Issue 2: The nature of carded gilled sliver was extensively explained in the petition, highlighting its characteristics and the manufacturing process. The petitioner argued, supported by the judgment in Union Carbide India Ltd. case, that goods incapable of being sold to a consumer are not excisable goods. The Supreme Court's decision in Union Carbide India Ltd. case, where aluminium cans were deemed not liable for excise duty due to being unsellable, was cited to support the petitioner's claim. The petitioner asserted that the slivers in question fall under the same category and should not be subjected to excise duty. Issue 3: The respondents relied on a subsequent judgment by the Supreme Court in J.K. Cotton Spg. & Wvg. Mills Ltd. case to support their contention that goods can be subject to excise duty even if not sold. However, the court found no such observations in the J.K. Cotton Spg. & Wvg. Mills Ltd. judgment. The court emphasized that the crucial factor is whether the goods are capable of being sold, not whether they are actually sold. The court rejected the argument that inclusion in Tariff Item No. 43 automatically implies liability for excise duty, citing the precedent of Union Carbide India Ltd. case. In conclusion, the court ruled in favor of the petitioner, holding that the carded gilled sliver is not subject to excise duty as it is incapable of being sold to a consumer. The court made the rule absolute in favor of the petitioner, ordering the cancellation of the bank guarantee and refund of any paid amount. No costs were awarded in the case.
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