CADILA LABORATORIES LTD. Vs. CCE

JUDGEMENT

(1.) IN this appeal field by M/s. Cadila Laboratories Ltd. against order dt. 19.8.1993 passed by the Collector, Central Excise, Vadodara, the issue involved is about the excisability of five intermediate products arising during the course of manufacture of bulk drugs.

(2.) 1. Ms. Enakshi Kulshrestha, Ld. Advocate, submitted that the impugned intermediate products were in process materials in crude form which were not marketable; that these products were not goods because they were neither ordinarily marketable nor had they been ever marketed nor were they pure nor stable nor were they known to any technical literature either nationally or internationally; that these products are not separately chemically defined compound; that these products came into being in a continuous and uninterrupted process of manufacture of bulk drugs; that these were not isolated from the process for the purpose of due refinement and standardization but were captively consumed for further manufacture of the bulk drugs in the state they arose. The Ld. Advocate, relied on the following decisions:

(3.) COUNTERING the arguments, Shri Sumit K. Das, Ld. D.R., submitted that on the question of marketability, the Revenue is only required to establish that the goods are capable of being bought and sold in the market. He relied upon the decision of the Supreme Court in the case of A.P. State Electricity Board v. CCE, 1994 (70) ELT 3 (SC) :, 1994 (53) ECR 349 (SC) wherein the Apex Court held that "the 'marketability' is thus essentially a question of fact to be decided in the facts of each case. There can be no generalisation. The fact that the goods are not in fact marketed is of no relevance. So long as the goods are marketable, they are goods for the purpose of section 3. It is not also necessary that the goods in question should be generally available in the market." Drawing our attention to the impugned order, the Ld. D.R. mentioned that the production of all the impugned products were recorded by the Appellants; these products were kept in containers stored till they were required for captive use; these goods were weighed and weight was recorded in the log sheet in the plant; that Shri S.C. Manakiwal, Dy. Chief Executive of Research and Development of the Appellants, had stated in his statement that in the log sheets mentioned in the plant, they were showing the date of Brown oil separately and the quantity is determined by weight; the Brown oil was kept in plastic drums for the purpose of weighing and thereafter it was taken in another reactor; that Epoxy derivative in powder form was kept in steel metal containers; that they were ascertaining the quantity of 3 -4 Diamino by weighment by putting in Plastic drums. The Ld. D.R. contended that this goes to show that the products are stable and that these products were not arising in the continuous uninterrupted process of manufacture but they were arising distinctly and independently which could conceivably be sold to another Industrial user; that the mere fact that the Appellants were not actually selling them, does not make the impugned products non -marketable. He further submitted that two products, namely, 5 -4 Diamino Benzophenon and Thiourea Derivatives had been purchased by the Appellants from the local market which also prove the marketability of the products. Countering the agreement of the Ld. Advocate that the demand is time barred, the Ld. D.R. submitted that the letter dated 21.4.1987 submitted by the Appellants only contained the brief process of manufacture with names of raw materials; that this communication did not in any manner disclose to the department about the manufacture of impugned products; that the test memo pertained to the products manufactured by the Appellants in a different factory and the samples were not drawn in respect of the products in question; further these samples were drawn in a complete different context for ascertaining the correct classification under item 68 of the erstwhile Central Excise Tariff.