COMMISSIONER OF CENTRAL EXCISE Vs. SATIA PAPER MILLS

JUDGEMENT

(1.) In these appeals, filed by revenue, the common issue involved is whether "bleach liquor" manufactured by the Respondents is chargeable to Central Excise duty.

(2.) We heard Shri Virag Gupta, learned D.R. and Shri K.K. Anand, learned Advocate. The learned D.R. submitted that the Respondents manufacture Paper and Paper Board and avail of Modvat Credit of the duty paid on the inputs used in the manufacture of their final products; that an intermediate product, namely, Bleach Liquor, falling under sub -heading No. 2828.90 of the Schedule to the Central Excise Tariff Act emerges during the manufacture of paper which is used in the continuous process of manufacture of paper; that the Commissioner (Appeals) in different Orders -in -Appeal has held that the bleach liquor is not marketable as it has a very short shelf life and it is not possible to take it out from the continuous process and market it; that the Department has not produced any evidence that the impugned product is marketable and that an article cannot be liable to duty merely because of its specification in the Tariff; that the Commissioner (Appeals) has also relied upon the decisions in the case of C.C.E., Baroda v. United Phosphorous Ltd. [2000 (117) E.L.T. 529 (S.C.) = 2000 (38) RLT 239 (SC)I and C.C.E., Raipur v. Orissa Concrete, 2001 (127) E.L.T. 178 (T) = 2000 (41) RLT 540 (CEGAT)].

(3.) The learned D.R., further, submitted that the bleach liquor is a product classifiable under sub -heading 2808.90 of the Tariff; that the captive consumption of the impugned product in the manufacture of writing and printing paper is not covered under Notification No. 67/95 -C.E., dated 16 -3 -1995 as the final product is chargeable to nil rate of duty; that the decision in the case of United Phosphorous is not applicable to the present matters as the issue pertained in that case relates to the intermediate product coming into existence in the course of manufacture of pesticides which cannot be equated with the bleach liquor which is having sufficient shelf life; that the impugned product is commercial calcium hypochlorite which has been explained separately in the Explanatory Notes of H.S.N. below Heading 28.09; that the very fact that a specific heading has been incorporated in H.S.N. indicates that the product is marketable throughout the world; that if the impugned product is not marketed by the respondents or cannot be marketed by them due to some factors like packing, availability of market, etc., it does not mean that the impugned product is not capable of being marketed. He relied upon the decision in the case of Plasmac Machine Mfg. Co. (P) ltd. v. C.C.E., 1991 (51) E.L.T. 161 (S.C.) wherein the Supreme Court has held that 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, use in the captive consumption is not determinative but the article must be capable of being sold in the market or known in the market as goods. Reliance has also been placed on the decision in the case of Hindustan Polymers v. C.C.E., 1989 (43) E.L.T. 165 (S.C.) wherein the Supreme Court has held that "Manufacture under the Excise Law is the process or activity which brings into being articles which are known in the market as goods and to be goods these must be different, identifiable and distinct articles known to the market as such. It is then and then only that manufacture takes place attracting duty. In order to be goods, it was essential that as a result of the activity, goods must come into existence. For articles to be goods, these must be known in the market as such and these must be capable of being sold or being sold in the market as such". ".. In order, therefore, to be manufacture, there must be activity which brings transformation to the article in such a manner that different and distinct article comes into being which is known as such in the market". He contended that it is thus clear that it is not necessary that goods are transported and sold in a ready market, so long as the the fact of marketability stands proved.