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TMI Blog2002 (5) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... which the proposal was made to levy duty on BMS. They submitted that in order to levy duty under Central Excise Act, the department must show that the item is goods, which is known to the trade which deals in the item. The item must be capable of being bought and sold in the market and as the BMS cannot be bought and sold in the market, it cannot be treated as marketable and therefore, it cannot be treated as goods liable to Central Excise duty. 2. The Assistant Collector confirmed the duty liability in terms of Rule 2(a) of Interpretative Rules and approved the Classification Lists. Aggrieved by this, the appellant took Writ Proceedings to the Hon ble High Court of Karnataka and filed the remand orders. In remand the Assistant Collector found and held :- (a) That the appellants have adduced evidence by way of affidavits and letters from bulk drug dealers to show that BMS sent on stock transfer basis to their other units for use in the bulk drug manufacture is not marketed. (b) That the department tried to make its own enquiries and the department was not able to furnish any documentary evidence in support of the marketability of the BMS. Therefore, there was no alter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as BMS satisfies the norm laid down by the Hon ble Supreme Court in the case of Indian Cable Co. Ltd. cited supra it should necessarily be held that it is a marketable product. I also find that the Drug Controller, Government of Karnataka has categorically clarified that BMS is a drug intermediate. This has also not been countered by the respondents in any manner. The respondents have relied upon 4 decisions of the Hon ble Supreme Court. I find that none of these decisions come to their rescue. In the decision reported in 1997 (90) E.L.T. 424 copper pthalocyanine (CPC) manufactured while still in lump form was taken for captive consumption in the same factory. It was neither pulvarised, standardized nor packed in containers. The decision reported in 1997 (91) E.L.T. 253 (S.C.) pertains to acetylene gas which emerges during the manufacture of trichloroethelene. Moreover, the acetylene gas was captively consumed and the case was remanded. In the case reported in 1997 (92) E.L.T. 315 (S.C.) calcium carbide was used within the factory in the manufacture of acetylene gas. It was not packed in airtight containers and hence it was held to be not excisable. In the case of Travancore Elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular cassette was useful only to a particular party does not affect its exigibility and the fact that marketability is not determined by sale inasmuch as everything sold is not marketable. We are aware that Supreme Court has reversed this decision, but not on this aspect. Marketability is a fact to be established in each case based on evidence available. The fact of the goods being packed and ready for despatch and despatched would be relevant fact to determine the marketability . The Apex Court decision in the case of A. P. State Electricity Board [1994 (70) E.L.T. 3 (S.C.)], the Apex Court laid down test of marketability and held .........it makes no difference so long as they are available purchasers . We would find these finally produced goods marketable. Apex Court decision in the Indian Cable Co. Ltd. [1994 (74) E.L.T. 22 (S.C.)] has held :- 11. After adverting to the aforesaid definition of excisable goods and the meaning of the word goods , a Constitution Bench of the Supreme Court in Union of India v. Delhi Cloth and General Mills, 1977 (1) E.L.T. (J 199) (S.C.) = AIR 1963 SC 791, at P. 795 stated in Paragraph 17 thus : These definitions make i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontra per : G.A. Brahma Deva, Member (J)]. - I have gone through the proposed order, written by my ld. Brother, Shri S.S. Sekhon, Member (Technical). I am unable to agree with the conclusion arrived at by him on the point at issue. Hence, this separate order. 7. The short point to be considered in this case is whether the material by name Benzyl Methyl Salicylate (shortly referred to as BMS) which goes into the manufacture of the bulk drug Salbutamol Sulphate is an excisable goods. It was submitted on behalf of the party that BMS was not an excisable commodity since the same is not sold by them nor the same has been purchased by any other party. According to the Department, the product in question is covered in Chemical Weekly Drugs Directory as a product manufactured by the appellants and furthermore the goods are packed and sent on stock transfer basis to their other units at different places. 8. The Assistant Collector who adjudicated the matter held that item is not marketable based upon the evidence by way of affidavits and letters from bulk drug dealers to show that BMS sent on stock transfer basis to their other units for use in the bulk drug manufacture, is not marketed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmediate products and not goods. While holding that view it observed in order to attract excise duty, the article manufactured must be capable of sale to a consumer. Entry 84 of List I of Schedule VII to the Constitution specifically speaks of duties of excise on tobacco and 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. 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. 11. While re-affirming the above view, further in the case of Collector of Central Excise v. Ambalal Sarabhai Jt. [1989 (43) E.L.T. 214], it was held that the Department was to charge excise duty on an article and such levy is disputed by the assessee on the ground that goods were not marketable, the burden is on the Department to prove that goods are either marketed or marketable and if no evidence has been adduced by the Department in spite of opportunities, and the assessee has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were manufactured by independent contractors who sold them to Kerala State Electricity Board. On that ground, the Supreme Court held that sale by contractors to Kerala State Electricity Board itself shows that such poles do have a market. It is not the case herein that the product in question was sold by the appellant or purchased by anyone. Neither this product as such was sold by the Company nor any purchaser in the market has purchased the very product. Admittedly, the product in question was used in the process of manufacture of other finished product. Mere finding place in Chemical Weekly or packing for the purpose of sending on stock transfer basis to other units for use in the bulk drug manufacture itself, is not sufficient to prove that item is marketable or capable of being marketed. Since Department has not produced any evidence in this case to show that item as such marketed or marketable, Department s case remains unsubstantiated in my view. Accordingly, appeal deserves to be allowed. Sd./- (G.A. Brama Deva) Member (J) In view of the difference of opinion, in between the two members of the Bench, the matter is placed before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a drug which is consumed by the human beings. The Drug Controller has also termed this product as a drug intermediate. It is the very case of the appellants and is also mentioned in the Chemical Weekly - Drug Directory - that the appellants are the only manufacturers of BMS which they are consuming captively in the manufacture of the end product Salbutomol Sulphate . It is for this reason that the market enquiries conducted by the Department have not been able to establish any real sale of this item in the market. A manufacturer of Salbutomol - M/s. KOPAL Ltd., Bombay and the bulk drug dealers in the market on enquiry have reported that they have neither used nor have seen the BMS being sold in the market. This is for the simple reason that the appellants are the one and the only manufacturers and the users of the BMS in India. This evidence only establishes the fact that the product is actually not being marketed but it does not establish that it is also not marketable. The Hon ble Supreme Court in Para 10 of their judgment in the case of A. P. State Electricity Board v. Collector of C. Excise, Hyderabad reported in 1994 (70) E.L.T. 3 (S.C.) have observed that - The mark ..... X X X X Extracts X X X X X X X X Extracts X X X X
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