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TMI Blog1994 (12) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered as `goods' to attract the levy of excise duty. 3.The petitioner-company in Para 2 of the Writ Petition averred thus : - "The petitioner company manufacturers, inter alia, woollen yarn from raw-wool. This woollen yarn is of the grade which is only fit for Carpet making. In the process of manufacture of the end product woollen yarn from the raw material raw-wool, the raw-wool is processed and this processed raw wool obtained in the form of `Sliver' is then spun into yarn within the continuous process in the same factory. `Sliver' is only an in-process material. There is no removal of this `Sliver' from the factory and it is not capable of being removed from this factory. This `Sliver' is non-cohesive and is a brittle web of wool consisting of a collection of loosely held wood fibres. It has no cohesive property and cannot stick together and remains in a very loose form. It is very brittle in nature and is liable to fall part by handling. It also gets entangled if it is not handled gently thereby becoming unsuitable for spinning. As such, this `Sliver' is not marketable and is not marketed." Again in Paras 10 and 11 it is averred : (a) The petitioner No. 1 manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form of wool, which is still in its fibre form, may be described as Sliver. (f) This Sliver is then processed through three stages to make them more uniform in diameter and to further reduce the weight per meter to make it suitable for feeding into ring frames for spinning yarn. These machines are called Draft-O-Matic Machine, Inter Draw Frame and Finisher Draw Frame. (g) The Sliver so obtained in the process is fed into the spinning frame through the spinning ring where it is spun into yarn. All this is done in the said spinning Section. The sliver obtained in the petitioner's process consists of a mere collection of loosely held fibres. The wool fibres in the Sliver are not of uniform lengths and are not parallelised and no oil is added. The Sliver has no cohesive properties and cannot stick together and remains in loose form. This sliver is very brittle in nature and is liable to fall apart by handling. It also get entangled if it is not handled gently, thus becoming unsuitable for spinning. If the Sliver falls apart or gets entangled, it becomes unfit for spinning and cannot be fed into ring frames for spinning. Moreover, it is important to maintain humidity condition in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. If the sliver is not spun into yarn within this period in continuity it would become totally unfit for spinning and would have to be treated as waste. This amply illustrates that the type of sliver obtained at an intermediary stage in a continuous process of obtaining carpet yarn in the petitioner's factory cannot be described as marketable commodity. It has no shelf life and is not capable of being taken out of the factory for sale." 5.Petitioner has annexed to the Writ Petition, an affidavit of its Research and Development Manager, who is an expert in the field of manufacture or woollen yarn. This affidavit of Dr. Sailen Chaudhary elaborately details the process of manufacture and the nature of the `Sliver', which has only a transient character, without a `shelf life' of its own. Petitioner has also produced a few more documents, such as : (i) affidavit of two wool Merchants trading in raw wool, wool yarn etc.; and (ii) a letter issued by the Deputy Director (Textiles) of the Indian Standards Institution, stating that Carded Gilled Sliver is not traded in; (iii) the certificate issued by Wool and Woollen Export Promotion Council (a body set up by Government of India), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sliver of semi-worsted system. In the additional Rejoinder, petitioner pointed out that Rajasthan Worsted Spinning Mills was manufacturing worsted yarn and was adopting worsted process, involving combing operations, while, the unit of the petitioner has the semi-worsted system in which no combing operation was involved. Petitioner has dealt with these documents filed by the respondents elaborately, and has been successful in proving them to be irrelevant to the issue involved in the present Writ Petition. 7.Two questions require to be considered. The first pertains to the objection raised by Mr. Madan Lokur that the issue involved is one of fact, which could be raised before the statutory authorities and therefore, the Writ Petition is not maintainable, and the second one pertains to the merits of the case pleaded. 8.Normally this Court would relegate a petitioner to the statutory forums, to agitate the question, when, effective alternative forums are available under the Statute; this is more so, in the case of fiscal legislations. The Writ Petition was admitted on 24-9-1982 (more than 12 years ago) since, the validity of certain statutory provisions was raised in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of Slivers are goods. 12.This contention also has no force. No doubt, when the entry refers to any material manufacture of which attracts the excise levy, it is reasonable to assume it to be `goods'. But, at the same time, it should be borne in mind that such an entry could refer to only such of the materials or articles which could be called `goods' having a market. If the entry refers to `Sliver', it only means, `Sliver' of the kind, which has a market, as in the case of Sliver obtained in the worsted systems. 13.In Bhor Industries Ltd. v. Collector of Central Excise; 1989 (40) E.L.T. 280, the Supreme Court indicated the above approach, at Page 283 : "It appears to us that under the Central Excise Act, as it stood at the relevant time, in order to be goods as specified in the entry the first condition was that as a result of manufacture goods must come into existence. For articles to be goods these must be known in the market as such or these must be capable of being sold in the market as goods. Actual sale in the market is not necessary, user in the captive consumption is not determinative but the articles must be capable of being sold in the market or known in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astic Woollens and Others v. Collector of Customs, Bombay - 1988 (34) E.L.T. 85 to point out `Sliver' is a marketable commodity. We do not think it so. The commodity involved therein was in fact `woollen waste', which included the `waste' out of slivers. It is the petitioner's case that sliver that comes into existence for a short period in its factory will become a `waste', if it is sought to be sold elsewhere, by taking it out of the factory. 18.In Transasia Carpets Ltd. & Another v. Union of India and Others - C.W. 1248/1980 decided on 23-1-1990, under similar circumstances, a Bench of this Court held that the Sliver emerging at the intermediate stage during the manufacture of woollen yarn is not excisable as it is not marketable. It was held that sliver cannot be packed or transported unless processes like combing, false twisting and balling are done. 19.In the result, this Writ Petition is allowed. It is declared that the `Sliver' coming into existence in the petitioner's factory is not liable to the levy under the Act and the respondents are restrained from levying the duty under the Act. The impugned notices/letters referred in Para 28(e) of the Writ Petition a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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