M/S. NICHOLAS PLRAMAL INDIA LTD. versus COMMNR. OF CENTRAL EXCISE, MUMBAI

Citation: [2010] 13 S.C.R. 1165 · Decided: 29-11-2010 · Supreme Court of India · Bench: MUKUNDAKAM SHARMA · Disposal: Dismissed

Judgment (excerpt)

[2010] 13 (ADDL.) S.C.R. 1165 
M/S. NICHOLAS Pl RAMAL INDIA LTD. 
v. 
COMMNR. OF CENTRAL EXCISE, MUMBAI 
(Civil Appeal No. 5829 of 2002) 
NOVEMBER 29, 2010 
[DR. MUKUNDAKAM SHARMA AND ANIL R. DAVE, 
JJ.] 
Central Excise Act, 1944: 
s.2(f) - Intermediate goods - Captive consumption of -
Levy of excise duty - Held: Intermediate goods captively 
consumed are liable to levy of excise duty if they satisfy the 
test of both manufacture and marketability - Crude vitamin 
A 
B 
c 
A emerged in the manufacture of Vitamin A -
Emerged 0 
product used in the manufacture of animal feed supplements 
- The fact that assessee used the emerged product instead 
of purchasing the same from market for the manufacture of 
animal feed supplements would show that emerged product 
was marketable - Duty leviable on the emerged product. 
s.2(f) - Marketability- Short shelf-life cannot be equated 
with no shelf life and would not mean that it is not marketable. 
E 
s.11A - Demand - Limitation - Suppression of facts -
Intermediate goods arising in the manufacture of final product 
F 
- Use of intermediate product in manufacture of another 
product without payment of duty - Non- disclosure of this fact 
to the revenue - Held: Extended period of /imitation is 
invokable for demanding excise duty. 
Appeal: 
Appeal before Supreme Court - Concurrent findings of 
fact - Scope of interference - Held: Supreme Court should 
be slow in interfering with the concurrent findings of fact 
1165 
G 
H 
1166 SUPREME COURT REPORTS (201 OJ 13 (ADDL.) $.C.R. 
A 
unless it is shown that the said findings were perverse or 
patently illegal. 
The appellant-assessee was engaged in the 
manufacture of Vitamin A in finished and marketable 
8 
form. It was also manufacturing animal feed supplements. 
During the intermediate stage of manufacture of Vitamin 
A, Vitamin A in its crude form emerged. The department 
issued five show cause notices to the assessee 
demanding excise duty on the intermediate product 
consumed by the assessee in the manufacture of animal 
C feed supplements. The Commissioner confirmed the 
liability to duty for the goods manufactured and cleared 
between December 1989 and February 1995 and imposed 
a penalty on the appellant. The Tribunal upheld the 
finding of the Commissioner as regards the excisability 
D of the product in question. As regards the question that 
demands were barred by limitation, the Tribunal held that 
three notices relating to period November 1994 to 
February 1995 were within limitation. The instant appeal 
was filed by the assessee challenging the order of the 
E 
Tribunal. 
F 
Dismissing the appeal, the Court 
HELD: 1.1. The taxable event for the levy of excise 
duty is the manufacture of goods. The term 
"manufacture" is of wide import and may include various 
activities and processes which may not be termed as 
'manufacture' in the common parlance. But manufacture 
of goods alone is not enough. In order to attract the levy 
of excise duty, the goods should not only be 
G manufactured, i.e., come into existence, but also should 
be articles or products that are known to the market and 
must be capable of being bought and sold. There cannot 
be any doubt that the intermediate products, even if 
captively consumed and not actually sold, may be liable 
H to levy of excise duty if they satisfy the test of both 
NICHOLAS PIRAMAL INDIA LTD. v. COMMNR. OF CENTRAL 1167 
EXCISE, MUMBAI 
manufacture and marketability. The marketability of a 
A 
product is essentially a question of fact. Therefore, the 
question of marketability has to be determined in the facts 
of each case and cannot be strait-jacketed into pigeon 
holes. The orders passed by the Commissioner as also 
the Tribunal clearly demonstrated that the product in 
question was commercially known and was capable of 
being marketed. The fact that the appellants had chosen 
not to sell the product in question would not mean that 
B 
the same was not capable of being marketed. There was 
also no dispute that the said product in question was c 
used in the manufacture of the animal feed supplement 
sold by the appellant. If the appellant had not used the 
product in question, they would have had to buy the 
same from the market to manufacture and sell the animal 
feed supplement. This would clearly show that a 
0 
marketable product emerged. Furthermore, in dealing 
with a question of fact, this Court would be reluctant in 
interfering with concurrent findings of fact on the i

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