LexBATA INDIA LTD. versus COMMISSIONER OF CENTRAL EXCISE, NEW DELHI
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[2010] 4 S.C.R. 501 BATA INDIA LTD. v. COMMISSIONER OF CENTRAL EXCISE, NEW DELHI (Civil Appeal No. 2377 of 2002) APRIL 12, 2010 [DALVEER BHANDARI AND K.S. RADHAKRISHNAN, JJ.] Central Excise Act, 1944: s.2(d) - Excisable goods - Unvulcanised sandwiched fabric assembly produced during the manufacturing process of footwear in assessee's factory and captively consumed - Held: Cannot be termed as "goods" - In the absence of proof A B c of marketability, the intermediate product would not be goods D much less excisable goods - Such a product is excisable only if it is a complete product having commercial identity capable of being sold to a consumer which has to be established by revenue - No evidence produced by revenue to show that the intermediate product "unvulcanised E sandwiched fabric" as such was capable of being marketed - The mere fact that the said product was entrusted outside for some job work such as stitching is not an indication to show that it is commercially distinct or marketable product - Central Excise Tariff Act, 1985 - Sub-heading number 5905.10 - Notification No. 143194-CE dated 7. 12. 94. F Notification No.143194-CE dated 7.12.94 - Exemption under - Held: Available in respect of unvulcanised sandwiched fabric assembly produced during the manufacturing process of footwear if captively used for the G manufacture of exempted footwear. Words and phrases: 'goods' - Meaning of, in the context of s.2(d) of Central Excise Act, 1944. 501 H 502 SUPREME COURT REPORTS [2:010] 4 S.C.R. A The appellant-assessee has been in the business of manufacture of footwear. For the manufacture of foot wear, it purchased various raw materials from the market such as fabrics, rubbers, chemicals, solvents etc. During the manufacturing process, various chemicals/rubbers/ B solvents etc., are mixed together and a thin layer of such mixed materials is sandwiched in between two sheets of textile fabric, in running length, througlh a three bowl calendering machine. The product is later cut and stitched according to the assessee's requirements and c in-process materials are used as shoe-uppers in the foot wear. Such fabrics are also at times sent to job workers for stitching purposes only and the fabric sandwiched with the mixed materials are inputs of 1the intermediate stage during the course of manufacture of footwear. 0 Vulcanisation of the foot wear takes place only after completing the entire process and them it becomes a finished product as a footwear, made available in the market and acquires commercial identiity and turns out to be a commercially known product. E The question which arose for consideration in the instant appeal was whether 'unvulcan1ised sandwiched fabric assembly' produced in the assessee's factory and captively consumed can be termed as "goods" and can be classified as "rubberized cotton fabrics" falling under F sub-heading number 5905.10 of the, schedule to the Central Excise Tariff Act, 1985. Allowing the appeal, the Court HELD: 1.1. The unvulcanised sandwiched fabric is G used as an intermediate product by the assessee. The burden to show that the product in question is marketed or capable of being bought or sold in the market so as to attract duty is entirely on the Revenue. Admittedly, the assessee is not marketing the product. Revenue did not H BATA INDIA LTD. v. COMMISSIONER OF CENTRAL 503 EXCISE, NEW DELHI succeed in establishing that the product in question was A either marketed or was capable of being marketed. The test of marketability is that the product which is made liable to duty must be marketable in the condition in which it emerges. No evidence was produced by the Revenue to show the product unvulcanised sandwiched B fabric as such was capable of being marketed, without further processing. The mere fact that the product in question was entrusted outside for some job work such as stitching is not an indication to show that the product is commercially distinct or marketable product. Without C proof of marketability, the intermediate product would not be goods much less excisable goods. Such a product is excisable only if it is a complete product having commercial identity capable of being sold to a consumer which. has to be established by the Revenue. [Paras .12 0 and 18] [510-A-E; 513-E-F] Union of India v. Delhi Cloth and General Mills Co. (1997) 5 SCC 767; Union of India v Delhi Cloth and G
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