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TMI Blog1982 (9) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... on these porcelain shells on the basis that they constituted porcelainware within the meaning of tariff item 23-B of the First Schedule of the Central Excises and Salt Act. It may be stated in this context that the respondents have a licence under the Act for the manufacture of chinaware and porcelainware which are excisable under tariff item 23-B, of the First Schedule to the Act. The respondents opposed the levy of excise duty on the porcelain shells. The stand of the respondents was that the porcelain shells do no constitute goods within the meaning of the Act on the manufacture of which excise duty was leviable. These porcelain shells are not known in common parlance as porcelainware and as such cannot fall within the meaning of porcelainware in tariff item 23 of the First Schedule to the Act. The porcelain shells are used only in the manufacture of lightning arresters. The lightning arrester is an integrated unit from which the porcelain shell cannot be separated and treated as porcelainware. The respondents also contended that in any event the entire stock of porcelain goods are cleared only for captive consumption and consequently no excise duty would be leviable, even assu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the learned Standing Counsel these porcelain shells are not intermediary goods but they are goods separately manufactured by the respondents and used as components of lightning arresters. Even assuming without admitting that the porcelain shells are intermediate products they still would be liable to excise duty. Further, the fact that the entire stock of porcelain shells are cleared for captive consumption by the respondents cannot make the shells any the less goods on which excise duty is leviable. 4. We directed the respondents to produce before us for inspection the porcelain shell. The appellants also made available to us the literature of the respondents regarding the lightning arresters. We find from the literature that the lightning arrester consists of a wet process porcelain housing, gap assembly, autovalve block, 18 inch line and ground leads, and a bracket for direct pole or wall mounting. What is called by the appellants as porcelain shell is described by the respondents in their literature as porcelain housing. To quote from the literature : "A strong wet process porcelain body houses the arrester internal parts. This porcelain, which is manufactured by ourse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... until excise duty leviable thereon has been paid at such place and in such manner as is prescribed in the rules and except on presentation of an application in the proper form and obtaining the permission of the proper officer on the form. Under Rule 9-A the date of actual removal of goods from the factory or warehouse shall be the date of determination of duty and tariff valuation. Chapter V of the Rules contains detailed provisions for the levy of excise duty. Rule 47 states that a manufacturer shall provide a store-room or other place of storage at his premises for depositing goods made on the same premises without payment of duty. No duty paid goods and no goods other than excisable goods made in the factory shall be deposited in such store-room or place. However where the manufacturer undertakes to pay duty on all such goods and clears them immediately on completion of manufacture the Collector may exempt him from providing such store-room or other place of storage. Under sub-rule (4), the manufacture is obliged to maintain a book in the proper form showing the date goods are despatched in or removed from such store-room or other place of storage and other details regarding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions construing the relative taxing powers of the Dominion and the Provinces under the British North America Act, 1867." Again in Union of India v. Delhi Cloth and General Mills, AIR 1963 S.C. 791 = 1977 E.L.T. (J 199), the Supreme Court observed thus - "Excise duty is on the manufacture of goods and not on the sale." 6. The next question to be considered is whether the porcelain shells produced by the respondents are goods within the meaning of Section 3 of the Act. The Act does not define goods. The term excisable goods is defined as meaning goods specified in the First Schedule as being subject to a duty of excise and includes salt. The meaning of the word `goods' have been given in the various dictionaries as follows :- "In Words and Phrases, Permanent edition Vol. 18, it is found as follows : The first exposition I have found of the word `goods' is in Bailey's Large Dictionary of 1732 which defines it simply `merchandise'; and by Johnson, who followed as the next lexicographer, it is defined to be movables in a house, personal or immovable estates, wares; freight; merchandise. Webster defines the word `goods' thus : `Goods' noun plural (1) movables, household f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods but defines excisable goods as meaning goods specified in the First Schedule as being subject to a duty of excise and includes sale." Then after referring to the meaning given to the word `goods' in Words and Phrases, Permanent edition, Vol. 18 and Webster dictionary of English language already referred to, the Supreme Court observed as follows :- "These definitions make it clear that to become `goods' an article must be something which can ordinarily come to the market to be bought and sold. This consideration of the meaning of the word `goods' provides strong support for the view that manufacture which is liable to excise duty under the Central Excises and Salt Act, 1944, must be the `bringing into existence' of a new substance known to the market." 8. On the facts of the case the Supreme Court observed as follows :- "Excise duty is on the manufacture of goods and not on the sale. Mr. Pathak is therefore right in his contention that the fact that the substance produced by them at an intermediate stage is not put in the market would not make any difference. If the raw material has been brought into existence a new substance by the application of processes one or more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t into existence from raw materials and that substance was the same as `refined oil' as known to the market it would be subject to duty. The question, therefore, was the substance sought to be charged `refined oil' known to the market? The affidavits showed that deodorisation was necessary before the product could be called `refined oil'. It was not in dispute that that process was employed after hydrogenation and not at the stage when what was called `refined oil' came into existence at an intermediate stage. No evidence was produced by the Union of India that refined oil was being brought to the market for without deodorisation. It was held that the raw oil purchased by the respondents for the purpose of manufacturing Vanaspati did not become that any stage `refined oil, as known to the consumers and the commercial community." The learned Judge again observed thus - "In our view, the gas generated by these concerns is kiln gas and not carbon dioxide as known to the trade i.e., to those who deal in it or who use it. The kiln gas in question therefore is neither carbon dioxide nor compressed carbon dioxide known as such to the commercial community and therefore cannot attract I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks were composed of compounds of aluminium, calcium, magnesium, iron and sillicon. The water absorption was found to be 0.37% and therefore the fuselinks could be considered as porcelainware. It was contended before this court by the English Electric Company that fuselinks were not porcelainware within the meaning of Tariff Entry 23-B of the First Schedule to the Act. After referring to the decision of the Supreme Court in Union of India v. Delhi Cloth and General Mills, AIR 1963 S.C. 791 = 1977 E.L.T. (J 199) and Tariff Entry 23-B in the First Schedule to the Act, Veeraswami, C.J. observed as follows :- "But then when one looks into the itemisation of articles in the Entry, doubt arises whether an article like high rupturing capacity fuselinks will be within the ambit of the Entry. The enumeration of the articles consists of tablewere, sanitaryware and glazed tiles. Fuselink of the type we have here have no possible analogy at all to any of the things mentioned there. It is no doubt true that the fourth item of Entry 23-B is `not otherwise specified' and this phraseology `read with all sorts' may perhaps justify a contention that porcelain of all sorts, although not tableware, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v. Asst. Collector of Central Excise, 1978 E.L.T. (J 180) for the proposition that an excise is a tax on the production or manufacture of goods and it is not necessary to attract excise duty that the goods should be sold or saleable. No exception could be taken to this proposition of law advanced by the learned Counsel relying on the decision of the Calcutta High Court. But the decision does not in any manner help the learned Standing Counsel. The question before the Calcutta High Court was whether raught-rolled zinc was liable to excise duty. The learned Judge has observed as follows in paragraph 19 of the judgment — "If there are separate and different processes of manufacture, and each process results in such transformation that a new and distinct article known in the market as such comes into being then each process would be subject to duty." The proposition is consistent with the decision of the Supreme Court in Union of India v. Delhi Cloth and General Mills Ltd., AIR 1963 S.C. 791 = 1977 E.L.T. (J 199). This fact is confirmed further by the observation of the learned Judge in paragraph 11 to the following effect, which are made after referring to the said decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Oudh Sugar Mills Ltd. v. Union of India, 1980 E.L.T. 327; Collector of Central Excise v. J.K. Synthetics Ltd., Kots, 1981 E.L.T. 5; J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. Union of India, 1981 E.L.T. 887. In re : Oriental Metal Pressing Works Pvt. Ltd., Bombay, 1981 E.L.T. 962, and Devi Dayal Enterprises and Wires Ltd. v. Union of India, 1982 E.L.T. 33. In view of the conclusions that we have reached on the basis of the Supreme Court decision, it is unnecessary to refer to these decisions cited by the learned Counsel for the respondents as these decisions do not strictly deal with the real question that arises for our decision in the present case. We may also make it clear that we have not expressed any opinion on the contention raised by Mr. Jagadeesan on behalf of the respondents that even assuming, without admitting, that the porcelain shells manufactured by the respondents for use as components in the manufacture of lightning arresters fall within the meaning of porcelainware under Tariff Item 23-B, they are not liable to excise duty since the entire stock of porcelain shells manufactured are used for captive consumption in the manufacturer of lightning arresters. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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