M/S. ESCORTS LTD. versus COMMNR. OF CENTRAL EXCISE, FARIDABAD

Citation: [2015] 5 S.C.R. 241 · Decided: 29-04-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2015] 5 S.C.R. 241 
M/S. ESCORTS LTD. 
V. 
COMMNR. OF CENTRAL EXCISE, FARIDABAD 
(Civil Appeal No. 6561OF2004 etc.) 
APRIL29, 2015 
[A.K. SIKRI AND R. F. NARIMAN, JJ.] 
241 
A 
B 
Central Excise and Salt Act, 1944 - ss. 3 and 11-A -
C 
Whether excise duty payable on 'Transmission Assembly', 
an inte_rmediate product which comes into existence during 
manufacture of tractors - Held: Transmission Assemblies 
being a distinct commercially known product, is liable to o 
excise duty- The fact that such product has not been sold is 
irrelevant- However, in view of the facts of the cases showing 
that there was no suppression or intent to evade the duty, 
extended period of limitation is not available to Revenue -
Constitution of India, 1950 - Art. 366( 12) - Entry 84, List I, 
E 
VII Schedule. 
Words and Phrases - "Materials", "Commodities", 
"Articles" and "Goods" - Meaning of. 
F 
Allowing the appeals, the Court 
HELD: 1.1 The Transmission Assemblies of 
tractors are commercially known products. The fact that 
not a single sale of such Assembly has been made by G 
the appellants is irrelevant. Therefore, the Transmission 
Assembly of the tractor is clearly an intermediate product 
which is a distinct product commercially known to the 
market as such. [Para 15] [262-F-G] 
H 
1.2 Forexcise duty to be chargeable under the 
241 
242 
SUPREME COURT REPORTS 
[2015] 5 S.C.R. 
A constitutional entry read with Section 3 of the Central 
Excise and Salt Act, two pre-requisites are necessary. 
First, there must be "manufacture" which is understood 
to mean the bringing into existence of a new substance. 
And secondly, the word "goods" necessarily means that 
B such manufacture must bring into existence a new 
substance known to the market as such which brings in 
the concept of marketability in addition to manufacture. 
[Para 1 O] [255-A-C] 
C 
1.3 Although the definition under Article 366(12) 
of the Constitution of India is an inclusive one, it is clear 
that 'materials', 'commodities' and 'articles' spoken of in 
the definition take colour from one another. In order to 
0 
be "goods" it is clear that they should be known to the 
market as materials, commodities and articles that are 
capable of being sold. [Para 9] [254-G-H] 
E 
F 
G 
H 
Union of India v. Delhi Cloth & General Mills Co. Ltd., 1963 
Suppl. 1 SCR 586: 1963 Suppl. SCR 586 - relied on. 
A. P State Electricity Board v. Collector of Central Excise, 
Hyderabad, (1994) 2 SCC 428: 1994 (1) SCR 499; South 
Bihar Sugar Mills Limited v. Union of India, (1968) 3 SCR 
21: 1968 SCR 21; Union Carbide India Limited v. The Union 
of India, (1986) 2 SCC 547: 1986 (2) SCR 162; Bhor 
Industries Ltd. II. Collector of Central Excise, Bombay, 
(1989) 1 SCC 602: 1989 (1) SCR 382; CCE v. Ambalal 
Sarabhai, (1989) 4 SCC 112: 1989 (3) SCR 784; Indian 
Cable Co. Ltd. II. Collector of Central Excise, Calcutta & 
Ors., (1994) 6 SCC 610: 1994 (3) Suppl. SCR 678; Moti 
Laminates (P) Ltd. V Collector Central Excise, Ahmadabad, 
(1995) 3 SCC 23: 1995 (2) SCR 81; Union of India & Ors. 
v. Sonic Electrochem (P) Ltd. &Anr., 2002 (145) E.L.T. 274 
- referred to. 
ESCORTS LTD. v. COMMNR. OF CENTRAL EXCISE, 
243 
FARIDABAD 
C.A. No. 6561of2004: 
A 
2.1 However, on facts of the present case extended 
period of limitatio:i is not available to Revenue. There 
was no suppression on the part of the appellants nor 
was there any willful attempt to evade duty. The appellant B 
has been manufacturing tractors from 1965 onwards. 
There has never been any change in the manufacturing 
process. In the year 1994-95, IC engines were stated by 
the department to contain Transmission Assemblies, 
which were dutiable. On receiving a reply from the C 
appellant, the department did not levy any excise duty 
9n such Transmission Assemblies. The show-cause 
notice itself stated that the issue of manufacture and 
captive consumption of Transmission Assemblies for 0 
tractors is the same as that for IC engines. These facts, 
coupled with the fact that not a single Transmission 
Assembly of tractors manufactured by the appellant had 
been sold, makes it clear that there was no suppression 
or any intent to evade excise duty in the present case. E 
Thus, the show cause notice needs to be quashed on 
this ground alone. [Para 19] [268-G-H; 269-A·C] 
Padmini Products v. Collector of Central Excise, 
Bangalore, 1989 (43) E.L.T. 195; Continental 
Foundation Joint Venture Holding v. Collector of Central 
Excise, Chandigarh - I, (200

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