1996 (12) TMI 138 - AT - Central Excise

Summary

Issues:
Classification of coils manufactured by the Electricity Board for Central Excise duty.

Analysis:
The judgment involves eight appeals concerning the classification of coils manufactured by the Electricity Board for Central Excise duty. The Assistant Collector of Central Excise, Amritsar, initially held that the conversion of electric wires into transformer coils constitutes a manufacturing process, resulting in new products subject to duty. However, the Collector of Central Excise (Appeals), Chandigarh, relying on a previous Tribunal decision, ruled in favor of the Electricity Board, stating that the demand was not sustainable. This decision led to the filing of seven appeals by the Collector of Central Excise. Additionally, the eighth appeal was filed by the Electricity Board against the order of the Collector of Central Excise (Appeals), New Delhi, who held that the coils manufactured by the Board are liable to duty, overturning the Assistant Collector's decision due to a violation of natural justice principles.

The legal representatives presented contrasting arguments. The department's representative argued that the conversion of coils should be considered manufacturing, citing a change in tariff and the complexity of the process compared to other recognized manufacturing activities. He emphasized the marketability of the coils, referencing various tribunal decisions and court judgments to support the classification of the coils as parts of transformers subject to duty. On the other hand, the Electricity Board's consultant relied on the principle of res judicata and judicial precedents to argue against the manufacturing classification of the coils.

The Tribunal, after considering the arguments, focused on the marketability aspect crucial for an item to be classified as "goods" under the Act. It was established that the coils fabricated by the Electricity Board were used internally and not sold in the market. The Tribunal emphasized the necessity for goods to be capable of being bought and sold in the market to qualify as marketable. It was concluded that the coils, being used captively and not independently sold, did not meet the marketability criterion, rendering them non-goods within the Act's definition.

Consequently, the Tribunal dismissed the department's appeals, confirming the order of the Collector of Central Excise (Appeals), Chandigarh. Simultaneously, the order of the Collector of Central Excise (Appeals), New Delhi, was set aside, and the appeal by the Electricity Board was allowed based on the lack of marketability of the coils, leading to their exclusion from the Act's definition of "goods."