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TMI Blog2005 (2) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of India undertaking in the business of manufacturing zinc in its factory. In the course of extraction of zinc from zinc-silver concentrate, a mixture or a combination of zinc chloride, silver chloride, lead and other material emerges from which, by further treatment sulphates of all other material are filtered out leaving behind the residue of silver chloride. 3.According to the department, silver chloride thus produced in the factory of the assessee is an assessable commodity liable to duty under Tariff Item 2843.10. According to the department, the said product is in the form of white paste and that the assessee opts for the slurry form of silver chloride as it is convenient to extract silver and separate other residues of metal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, the burden was on the department to prove that the silver chloride which is the residue of the treatment constituted "goods" in terms of manufacture and marketability. 5.Excise duty is levied under Section 3 on goods manufactured or produced in India. Thus, before excise duty is levied on an item, even if it is mentioned in the tariff, two conditions have to be cumulatively satisfied, namely, that the process by which an item is obtained is a process of manufacture and that the item so obtained is commercially marketable and bought and sold in the market or known to be so in the market. This legal position has been laid down by this Court in a number of judgments including Moti Laminates Pvt. Ltd. v. Collector of Central Excise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pure silver and, therefore, the content of silver in the silver chloride, which is sold in the market, is 75% and the purity level of 99%. 8.In the case of Cadila Laboratories Pvt. Ltd. (supra), the Division Bench of this Court, speaking through one of us [Variava, J.] has held : Thus, the law is that in order to be excisable, not only goods must be manufactured i.e. some new product brought into existence, but the goods must be marketable. By marketable it does not mean that the goods must be actually bought and sold in the market. But the goods must be capable of being bought or sold in the market. The law also is that goods which are in the crude or unstable form and which require a further processing before they can be marketed, cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made to find out whether any of these products are bought or sold in the market and more importantly it has not been verified, by drawing samples of Appellants' products and getting them chemically analysed, whether their claim is false. It has not been ascertained whether or not Appellants' products are in crude and unstable form and/or whether these products had a shelf life of only a few hours. Mere fact that they are stored in tins or cans for a short period would not ipso facto lead to the conclusion that the products were stable. It is admitted that the Appellants had bought one of the products from the market at one stage. However, they have explained that what was bought was in a purer form and the product they manufacture does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts, we hold that the department has failed to prove the test of marketability. 11.Before concluding, we may point out that since 1990, when the case of Hindustan Zinc Ltd. (supra) came to be decided, the question of excisability of silver chloride has been cropping up and yet till this day no steps have been taken by the department to go to the market and collect proper evidence of marketability. In most of the matters, we find lethargy and reluctance on the part of the department to collect evidence on marketability and even in cases where market enquiry is made it is made in a perfunctory manner. Consequently, despite the department having good case on classification, we are constrained to allow the appeal of the assessee on marketabili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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