1994 (12) TMI 93 - HC - Central Excise

Summary

Issues Involved:
1. Taxability of "Sliver" as an in-process material.
2. Marketability and individual identity of "Sliver".
3. Maintainability of the Writ Petition.
4. Relevance of statutory provisions and previous judgments.

Summary:

1. Taxability of "Sliver" as an In-Process Material:
The primary issue was whether "Sliver," an in-process material obtained during the manufacture of semi-worsted carpet yarn, is taxable under the Central Excises and Salt Act, 1944. The petitioner argued that "Sliver" is not marketable and is consumed within the manufacturing process without being removed from the factory.

2. Marketability and Individual Identity of "Sliver":
The court examined whether "Sliver" has an individual identity and marketability to be considered "goods" for excise duty. The petitioner detailed the manufacturing process, emphasizing that "Sliver" is a transient, non-cohesive, and brittle material unsuitable for handling, packing, or transportation. Expert opinions and supporting documents confirmed that "Sliver" lacks marketability and shelf life, distinguishing it from marketable products like "tops."

3. Maintainability of the Writ Petition:
The respondents argued that the issue should be raised before statutory authorities, not through a Writ Petition. However, the court decided to address the merits of the case due to the long duration since the petition's filing and the unimpeachable materials presented.

4. Relevance of Statutory Provisions and Previous Judgments:
The court referenced previous judgments, including *Indofil Chemicals Ltd. v. Union of India* and *Bhor Industries Ltd. v. Collector of Central Excise*, which emphasized that for an article to be considered "goods" under the Act, it must be marketable. The court found that the Revenue's evidence was irrelevant, as it pertained to the worsted system, not the semi-worsted system used by the petitioner.

Conclusion:
The court concluded that "Sliver" in the petitioner's factory is not marketable and does not qualify as "goods" under the Act. The Writ Petition was allowed, and the respondents were restrained from levying excise duty on "Sliver." The impugned notices and letters were quashed, and the rule was made absolute with no costs.