COLLECTOR OF CENTRAL EXCISE, BARODA versus UNITED PHOSPHORUS LTD.

Citation: [2000] 2 S.C.R. 1062 · Decided: 07-04-2000 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Dismissed
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Judgment (excerpt)

A 
COLLECTOR OF CENTRAL EXCISE, BARODA 
v. 
UNITED PHOSPHORUS LTD. 
APRIL 7, 2000 
B 
[S. RAJENDRA BABU AND R.C. LAHOTI, JJ.] 
Central Excises and Salt Act, 1944-Excise Duty-Levy of-On inter-
mediate products-Which came into existence at a certain stage of a multiple 
stage integrated chemical process-Held, intermediate products may be liable 
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to levy of excise duty if they satisfy the test of being goods on the touchstone 
of marketability-Onus to establish that an article is 'goods' and maTKetable 
is on the department-Indian Evidence Act, 1872-Chapter Vll. 
During manufacture of a product by the respondents, three interme-
diate products came into existence as intermediate products. The appel-
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lant passed orders of adjudication holding the three intermediate products 
liable to excise duty. 
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Respondents filed appeal before Collector (Appeals) who allowed 
the appeals, exonerating the intermediate products from levy of excise 
duty, finding that the three intermediate products came into existence at a 
certain stage of a multiple stage integrated chemical process leading to the 
final products and therefore they could not be held to be goods as under-
stood in commercial parlance because they were not marketable and that 
the department had failed in showing if any facility existed for separation 
of the said three products and whether in the form in which the said three 
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products came into existence in the reaction process were capable of being 
marketed. 
Appellant filed appeal againstthe order of the Collector (Appeals), 
before the Tribunal, wherein it did not challenge the finding of fact ar-
rived at by the Collector (Appeals), and the only argument was that the 
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three items were mentioned as 'goods' in the dictionary and one of the 
goods was mentioned as entitled to drawback in Duty Drawback Rules. 
The appeal before the Tribunal was dismissed. Hence this appeal. 
Dismissing the appeal, this Court 
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HELD : 1. No fault can be found with the view taken by the Tribunal 
1062 
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C.C.E. v. UNITED PHOSPHORUS LTD. 
1063 
that the mentioning of the items as "goods" in the dictionary and in the 
excise tariff and mere mentioning of an item in Duty Drawback Rules as 
one entitled to duty drawback with reference to a different context was not 
enough to satisfy the test of marketability unless it was shown that the 
intermediate products were capable of being taken to market and bought 
and sold. [1065G-H; 1066-A-B] 
2. Excise is a duty on goods as specified in the Schedule. The taxable 
event in the case of excise duty is the manufacture of goods. In Order to be 
excisable goods (i) there must be goods (ii) having come into existence as a 
result of manufacture, and (iii) to be goods, the article must be known to 
the market as such and as :would ordinarily come to the market for being 
bought and sold. Actual sale of the article is not required but it must be 
capable of being bought and sold. Intermediate products even if captively 
consumed may be liable to levy of excise duty if they satisfy the test of 
being goods on the touchstone of marketability. Though the intermediate 
goods so coming into existence may be specified in the Schedule as excis-
able they would not be subjected to duty unless they satisfy the test of 
marketability. [1064-E-G; 1065-B-C] 
Bhor lndusties l.Jd. v. Collector of Central Excise, (1989) 40 ELT 280 
SC; Union of India v. Delhi Cloth and General Mills Co. l.Jd., (1997) 92 ELT 
315 SC and Moti Laminates Pvt. l.Jd. v. Collector of Central Excise, 
Ahmedabad, (1995) 76 ELT 241 SC, relied on. 
3. Onus to establish that an article is 'goods' and marketable, is on 
the department. 
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B 
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D 
E 
Collector v. Amba Lal Sara Bhai Enterprise, (1989) 43 ELT 214 SC, 
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referred to. 
CIVIL APPELLAIB JURISDICTION : Civil Appeal Nos. 8999-9000 of 
1996. 
From the Judgment and Order dated 15.11.95 of the Central Excise 
Customs and Gold (Control) Appellate Tribunal, New Delhi in A. No. E/796/ 
92-C and E/3103/93-C. 
Gauri Shankar Murti, K.C. Kaushik and P. Panneshwaran for the 
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Appellant. 
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B 
c 
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F 
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1064 
SUPREME COURT REPORTS 
[2000] 2 S.C.R. 
Dushayant A. Dave, Jay Savla, J.K. Das and N. Menon for the 
Respondent. 
The Judgment of the Court was delivered by 
R.C. LAHOTI, J. The respondents are engaged in the manufacture of 
insecticides, fungicides, weedicides and pesticides falling under Tariff sub-
heading 3808.10 and excisable thereunder. During the process
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