M/S MOTI LAMINATES PVT. LTD. ETC. versus COLLECTOR OF CENTRAL EXCISE, AHMEDABAD

Citation: [1995] 2 S.C.R. 81 · Decided: 14-02-1995 · Supreme Court of India · Bench: R.M. SAHAI · Disposal: Appeal(s) allowed

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

Judgment (excerpt)

·~-( 
MIS MOTi LAMINATES PVT. LTD. ETC. 
A 
v. 
COLLECTOR OF CENTRAL EXCISE, AHMEDABAD 
FEBRUARY 14, 1995 
[R.M. SAHAI, N.P. SINGH AND K.S. PARIPOORNAN, JJ.) 
B 
Central Excise & Salt Act, 1944-Section 35-L~entral Excise Salt 
Rules 1944-Rules 9,49 and 173(1) as amended in 1979-Exigibility of 
duty-Goods mentioned in Schedule of Excise Tariff-whether dutiable as C 
such-Held, No-Test of marketability-Goods produced or manufactured 
ipso facto do not attract duty-They must be marketable or capable or being 
marketed-Dutiability of goods captively consumed. 
The appellants were manufacturers and sellers of laminated sheets. 
In the process of manufacturing the sheets the appellants used the raw D 
material by processing them with each other and with other material. In 
the process Phenol Formaldehyde was produced. The solution was taken 
out from the vessel in its semi-processed «ondition and was used without 
further processing in manufacture of laminated sheets. Since it was not 
marketed or sold by the appellants and the solution was captively con• 
sumed only, the Department did not levy any duty on it. In 1979, Rules 9,49 E 
and 173(1) of the Central Excise Rules, 1994 were amended whereby even 
captively consumed goods produced or manufactured became dutiable. 
Consequently the Superintendent of Central Excise issued Notice that in 
view of the amendments in Rules pheno~ formaldehyde and melamine 
formaldehyde were liable to duty. The appellants claimed that the reatting p 
mixtures were not only unstable having short life but they were not 
marketable in the form they were obtained in intermediate stage in a 
continuous process, that the reacting mixture in manufacture want on and 
it was complete on formations of laminated sheets by application of heat 
and pressure to these goods. The Assistant Collecter found that the 
mixture, namely, solution of the resin and water was not stable but held G 
that merely because solutions were not stable it did not mean that the 
resins produced by the appellants were not goods. The Collector (Appeals) 
agreeing with the finding that solutions were not stable allowed the ap-
peals. It was held that an intermediate product in order to be excisable 
must be a product known to the market or commercial community; and H 
81 
82 
SUPREME COURT REPORTS 
[1995) 2 S.C.R. 
A that in the instant case even though the products were used for the 
manufacture of plastic laminated sheets and synthetic resin was formed 
as an intermediate product but it being unstable in a non-marketable 
condition the resin mixture could not be considered as excisable under 
tariff item 15 A(l) of Central Excise Tariff. In further appeal filed by the 
Department the Tribunal held that resins which occurred in three stages 
B was nothing but resol at 'A' stage and resol being mentioned in item 15-A 
of Tariff Schedule it was covered by the 'chemical nomenclature' and, 
therefore, it was exigible to duty; that since, 'the products manufactured 
by 'appellants, fell under 15-A(l) the fact that these were not marketed or · 
sold did not make any difference; and that "since it was not made out, 'that 
C the product' was required to be taken into immediate use or otherwise i.t 
would have been rendered useless or it would cease to be resin" it was held 
that the product even though capable of, 'further condensation or 
polymerization' had reached, a definite stage of manufacture for a definite 
end use and, therefore, 'had to be held to be goods'. These appeals were 
D filed against the decision of the Tribunal. 
The Department urged that resin. or solution which was produced by 
the appellant was technically known as resols and resols being one of the 
items me~tloned under item 15 A it was a specific item, exigi.ble to duty 
and it could not further be required to satisfy the common parlance test 
E specially because this was a chemical and not a product which was com· , 
monly bought and sold in the market; that once it was found that it was 
manufactured or produced then it should be deemed to have satisfied the 
test of marketability and consequently it was excis.able goods within the 
meaning or the Act; that marketing capability depends on nature of goods 
F and the test of marketability and capable of being marketed could not be 
applied to such goods as resol, it having been mentioned in item no. 15A. 
The question raised for consideration was whether various goods 
mentioned in the schedule of Excise Ta

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