BHOR INUDSTRIES LTD., BOMBAY versus COLLECTOR OF CENTRAL EXCISE, BOMBAY

Citation: [1989] 1 S.C.R. 382 · Decided: 31-01-1989 · Supreme Court of India · Bench: SABYASACHI MUKHERJI · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

A 
BHOR INUDSTRIES LTD., BOMBAY 
v. 
COLLECTOR OF CENTRAL EXCISE, BOMBAY 
JANUARY 31, 1989 
B 
[SABYASACHI MUKHARJI ANDS. RANGANATHAN, JJ.J 
Central Excises and Salt Act, 1944/Central Excise Rules, 1944: 
Sections 2(d), 2(f), 3, 35-L and35-P/Rules, 10-A 173-1. 
Excise duty-Excisable goods-Mere fact that an article falls 
C 
within Tariff Schedule is not enough-Taxable event is 'manufacture of 
goods'-Which are marketable or capable of being marketed-
Marketability is an essential element-Burden of proof on revenue that 
goods are marketable. 
Central Excise Tariff Act, 1985: Schedule Item 15-A(2)-
D 
Production of crude PVC films-Non-marketable-Intermediate 
products-Used for captive consumption in end products such as 
leather cloth-Laminated jute mattings and PVC tapes-Whether classi-
fiable and liable to duty. 
Words and Phrases: 'Excisable goods'-'Manufacture'-Meaning 
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of. 
The appellant is a manufacturer of Crude PVC films for the 
purpose of use in final products such as leather cloth and laminate jute 
mattings and PVC tapes both insulation and adhesive. The films 
manufactured by the appellant were subject matter of adjudication by -1
1 
F 
the Excise authorities during the period commencing from 1st March, 
1970 to 29th May, 1971. The Appellate Collector of Central Excise by 
an order dated 14.1.1974 held that the appellant had produced suffi-
cient evidence to prove that the said Crude PVC films were not market-
able and were therefore not liable to excise duty. On 20.11.1975 the 
appellant filed a classification list in respect of Crude PVC films used 
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for lamination with jute and for tapes claiming that the said PVC films 
were non-excisable on the ground that the same were non-marketable 
intermediate products used exclusively for captive consumption. On 
;.. 
9.U.1975 the classification list was approved by the Assistant 
Collector, Central Excise. 
H 
On 15.2.1977, however, the Assistant Collector issued a show 
382 
t 
BHOR INDUS. v. COLLECTOR OF CENTRTAL EXCISE 
383 
cause notice calling upon the appellant to show cause as to why the 
aforesaid films should not be re-classified as excisable under Item 
No. 15A(2) of the Central Excise Tariff Schedule and appropriate dnty· 
not recovered under Rule 10 of the Central Excise Rules, as these then 
stood, read with Rule 173-J. By a corrigendum, dated 23.2.1977, to the 
said show cause notice Rule 10-A was substituted in place of Rule 10. 
The appellant contested the notice but the Assistant Collector vide his 
order dated 16th February, 1978 confirmed the said show cause notice 
by holding that the said PVC films were classifiable under Item 
No. 15A(2) and directed the appellant to pay duty at the appropriate 
rate on past clearances under Rule 10-A read with Rule 173-J. 
The appeal filed against the aforesaid order was rejected by the 
Appellate Collector of Central Excise on 10th October, 1979. A revision 
was preferred before Customs, Excise and Gold (Control) Appellate 
Tribunal. The Tribunal confirmed the order of the Apppellate 
Collector and held that the goods in question fell under Tariff Item 
No. 15A(2) and were dutiable in the intermediate list and the question 
of marketability or being capable of being sold in the market was not 
relevant, but modified the order to the extent that duty in respect of 
clearances prior to the issue of show cause notice was restricted to the 
period permissible in terms of Rule 10 read with Rule 173-J viz. 12 
months •. 
A 
B 
c 
D 
In the statutory appeal to this Court under Section 35-L of the 
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Central Excises and Salt Act, 1944 the question for consideration was 
whether the Crude PVC film was dutiable under Item No. 15A(2). 
Allowing the appeal, 
HELD: 1. In view of the Appellate Collector's order holding that 
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the Crude PVC films were not marketable goods and there being no 
contrary evidence found by the Tribunal subsequent to the finding by 
the Appellate Collector no excise duty should be charged under Item 
No. 15A(2) of the Central Excise Tariff on the Crude PVC Sheets. The 
Tribunal went wrong in not applying the proper test. The test of 
marketability or capable of being. marketed was not applied by the 
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Tribunal. [395D-E] 
2. Under the Central Excise Act, as it stood at the relevant time, 
hi order to be goods as specified in the entry the first conilltron was 
that :as a result of manlifacture gooils must "ome into existence. For 
articles to be goods these must be known in the mar

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