DHARAMPAL SATYAPAL versus COMMISSIONER OF CENTRAL EXCISE, NEW DELHI

Citation: [2005] 3 S.C.R. 746 · Decided: 21-04-2005 · Supreme Court of India · Bench: S.N. VARIAVA · Disposal: Dismissed

Judgment (excerpt)

A 
B 
DHARAMPAL SATYAPAL · 
v. 
COMMISSIONER OF CENTRAL EXCISE, NEW DELHI 
APRIL 21, 2005 
[S.N. V ARIA VA, DR. AR, LAKSHMANAN AND 
S.H. KAPADIA, JJ.] 
Central Excise Act, 1944; Ss. JJ(A), ll(AB), ll(AC), 173Q/ Central 
Excise Rules, 1944; R. 9(2)/ Excise Tariff Act, 1985, Tariff Headings 2404.49 
C and 2404.40/Notification No.121194: 
Levy of excise duty-Kimam manufactured by assessee in its unregistered/ 
unlicensed factories-Assessee claiming the product as intermediate item and 
not marketable-Revenue held the product as distinct, identifiable and 
marketable and levied excise duty by invoking extended period of limitation 
D as assessee failed to obtain registration and MODVAT credit inadmissible-
Affirmed by Tribunal by remanding the matter to Revenue for re-examination 
of the applicability of Notification No. 121194-0n appeal, Held: Assessee 
manufactured and used the product in question for manufacturing the final 
product in its other factories-..-Assesssee also purchased similar product from 
E other licensed dealers for manufacturing the final product-Hence, Rt~enue 
rightly held the product in question as distinct, identifiable product known to 
the market, and thus excise duty leviable thereon. 
Extended period of Limitation-invoking of-Held: Since assessee 
clandensinely manufacturing the product in question without getting the units 
F registered/licensed with the Excise department, under the circumstances 
Revenue was right in invoking the extended period of limitation. 
MOD VAT Credit-Right to claim against excise duty on final product 
vis a vis using it as defence of bonqfides against invoking of larger period of 
limitation in terms of proviso to Sec. 1 JA(J) of the 1944 Act-Distinction 
G between. 
H 
Words & Phrases-Marketability, 'Dutiability' 'test of marketablity', 
'Wilfulness '-Meaning of in the context of Central Excise Act, 1944. 
The questions which arose for determination in these appeals were 
746 
DHARAMPAL SATYAPAL v. C.C.E. 
747 
as to whether excise duty could be levied on the product 'Kimam' A 
containing chewing tobacco classifiable under Tariff Heading 2404.40/ 
2404.49 of the Excise Tariff Act, which was manufactured by the assessee 
in its units unlicensed/unregistered with the Excise Department and used 
it for manufacturing 'Tulsi Zafrani Zarda'/final product in its other 
factories; as to whether Revenue was right in invoking the extended 
period of limitation under the proviso to Section l lA (1) of the Central B 
Excise Act; and as to whether the benefit of proforma/modvat credit in 
respect of the product, was available in the facts and circumstances of 
the case. 
Dismissing the appeals, the Court 
HELD : 1.1. Marketability is an attribute of manufacture. It is an 
essential criteria for charging the excise duty. Identity of the product and 
marketability are the twin aspects to decide chargeability. Dutiabillty of 
c 
the product depends on whether the product is known to the market. The 
test of marketability is that the product which is made liable to duty D 
must be marketable in the condition in which it emerges. Marketable 
means saleable. The test of classification is, how are the goods known in 
the market. (755-F-G] 
Moti Laminates Pvt. Ltd v. Collector of Central Excise, Ahmeda~ad, 
(1995) 76 ELT 241; Union of India v. Delhi Cloth & General Mills Co. Ltd, E 
(1997) 92 ELT 315 and Cadila Laboratories Pvt. Ltd v. Commissioner of 
Central Excise, Vadodara, (2003) 152 ELT 262, relied on. 
1.2. The assessee adverted that the said "compound" was not capable 
of being used for any purpose, other than for manufacture of branded 
chewing tobacco. This statement of the assessee establishes that the said F 
compound (kimam) was not edible, it was not capable of consumption as 
such, however, it was used as preparation in the manufacture of Tulsi 
Zafrani Zarda which was a branded chewing tobacco manufactured in 
the licensed factories of the assessee. Further, from time to time, the 
assessee bought from the market a similar compound (Lucknowi kimam) G 
and used it in the manufacture of the final product which indicated that 
on blending of sada kimam with saffron, spices, menthol etc., the 
compound in question (kimam) which emerged was a distinct, identifiable 
product, known to the market as kimam. Hence, no infirmity is found in 
the impugned judgment of the tribunal which has held that the said 
compound (kimam) was marketable and classifiable as chewing tobacco H 

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