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TMI Blog1994 (9) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... t the goods are "marketable" i.e. saleable or suitable for sale, we hold that the order of the Appellate Tribunal is infirm. It should be set aside and we hereby do so. We order a remit of the matter to the Appellate Tribunal to consider the appeal afresh and dispose of the same in accordance with law. - Civil Appeal No. 3347 of 1984 - - - Dated:- 20-9-1994 - B.P. Jeevan Reddy, Suhas C. Sen and K.S. Paripoornan, JJ. A.K. Ganguli, Senior Advocate (K. Swamy, Advocate, with him), for the appellant. Joseph Vellapalli, Senior Advocate (A.K. Srivastava and V.K. Verma, Advocates, with him), for the respondents. [Judgment per : K.S. Paripoornan, J]. - This is an appeal filed by an assessee against the order passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, dated 11-11-1983, under Section 35-L(b) of the Central Excises and Salt Act, 1944, (hereinafter referred to as `the Act'). The respondents represent the revenue. The short question that arises for consideration in this appeal is whether a duty of excise was validly levied on "PVC compound" produced by the appellant from out of the duty paid PVC resin. The levy of duty relates to the period fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are manufacturers of electric wires and cables and they produce among other things a substance known as PVC compound (granule) out of duty paid PVC resins. During the material time, namely, 13-6-1977 to 28-6-1977, they manufactured 31 M.Ts. of PVC compound and removed the same for captive consumption within the factory. The PVC compound or granules produced out of duty paid PVC resins is only a modified form of PVC resins and the same cannot be called different goods commercially. The PVC compound in the form of granules, is not a marketable commodity, and that there is no finding of any statutory authority that it is otherwise. Even if the finding of the statutory authorities to the effect that the PVC compound in the form of granules produced by the appellants is a distinct and different commodity and the process employed by the assessee amounts to "manufacture" within the meaning of Section 2(f) of the Act is justified, it will not attract "excise duty" unless it is further found that the commodity namely, PVC compound in the form of granules, is a "marketable commodity". In the absence of such a finding, the statutory authorities were in error in holding that PVC compound in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd co-polymerisation reaction of the initial resin molecules. By compounding PVC resins with various ingredients like plasticizers, stabilizer, filler lubricants, some of the physical and mechanical properties of the initial polymer/resin are greatly modified, the PVC compound or modified form of PVC resin is obtained without bringing a change in the structural identity of the polymer molecules." 4.In the light of the above, the majority members of the Appellate Tribunal came to the conclusion that the conversion of PVC resin into PVC compound by the processes employed by the assessee, amounts to "manufacture" within the meaning of Section 2(f) of the Act. The Tribunal stated thus in paragraphs 12 13 of its order. "It is clear that a good deal of processing is involved and what emerges is a homogeneously mixed material which is first formed into a sheet and then broken into granules or chips. Evidently, it is not a case of simple loose mixture such as sand and pebble capable of being separated by simple physical means. It is also clear that processing results in some of the physical and mechanical properties of the original PVC polymer or resin being modified though the str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AND PLASTIC MATERIALS AND CELLULOSE ESTERS AND ETHERS, AND ARTICLES THEREOF - The following artificial or synthetic resins and plastic(1) materials, and cellulose esters and either, in any form, whether solid, liquid or pasty, or as powder, granules or flakes, or in the form of moulding powders, namely :- Condensation, Poly-condensation and Polyaddition products,(i) whether or not modified or polymerised, and whether or not linear such as Phenoplasts, Aminoplasts, Alkyds, Polyamides, Super Polyamides, Polyesters, Polyallyl esters, Polycarbonates, Polyethers, Polyethylenemines, Polyurethanes, Epoxide resins and Sillcones; (ii) Polymerisation and co-polymerisation products such as polyethylene, Polytetrahaloehylenes, - Polyisobutylene, Polystyrene, Polyvinyl Chloroacetate and other Polyvinyl derivatives, Polyacrylic and Polymethacrylic derivatives, and Coumarons-Indene Resins; and..........." Though the majority of the members of the Appellate Tribunal held that the process employed by the appellants amounts to "manufacture" within the meaning of Section 2(f) of the Act, the dissenting Member (J) held that it was not. We do not wish to pronounce finally, at this stage, rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employes hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;" 7.As to what constitutes "manufacture" generally has been explained in innumerable decisions of this Court. In one of the early decisions, in Union of India v. Delhi Cloth and General Mill Co. Ltd. 1977 (1) E.L.T. (J 199) (SC) = AIR 1963 SC 791, a Constitution Bench of this Court, in paragraph 14 of the Judgment quoted the following passage occurring in Permanent Edn. of Words and Phrases, Vol. 26, with approval : " `Manufacture' implies a change, but every change is not manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use." Again at para 18, the Court observed thus : " `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." This and other subsequent decisions were surveyed in later Constitution Bench decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia as, and at the rates, set forth in the Schedule to the Central Excise Tariff Act, 1985....." Section 2(d) defines `excisable goods'. We have quoted the definition in para 5 supra. The word "goods" is not defined in the Act. 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) (SC) = AIR 1963 SC 791, at p. 795, stated in paragraph 17 thus : "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." 12.In a series of decisions, this Court has held that "marketability" is an essential ingredient, to hold that an article is dutiable or exigible to duty of excise. The important decisions of this Court which have laid down the law on this aspect, are the following : (1) Union of India v. Delhi Cloth and General Mills Co. Ltd. - 1977 (1) E.L.T. (J 199) (SC) = AIR 1963 SC 791. (2) South Bihar Sugar Mills v. Union of India - 1978 (2) E.L.T. (J 336) (SC) = AIR 1968 SC 928 = 1968 (3) SCR 21. (3) Bhor Industries v. Coll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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