UNION CARBIDE INDIA LIMITED versus UNION OF INDIA AND ORS.

Citation: [1986] 2 S.C.R. 162 · Decided: 04-04-1986 · Supreme Court of India · Bench: R.S. PATHAK · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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162 
UNION CARBIDE INDIA LIM.ITED 
Vo 
UNION OF INDIA AND ORS. 
APRIL 4, 1986 
[R.S. PATHAK, A.P. SEN AND D.P. MADON, JJ.] 
Central Excise and Salt Act, 1944, s. 3 and Entry 27 of 
First Schedule -
Aluminium cans for torch bodies -
Whether 1 
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excisable goods. 
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Words & Phrases - "Excisable goods" - Meaning of. 
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lhe appellant, a public limited company, carries on the 
business of the manufacture and sale of flashlights (torches). 
It used to purchase aluminium slugs and produce aluminium cans 
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or torch bodies at its factory by a process of extrusion. lhe 
Superintendent of Central Excise required the appellant to 
submit a price list in respect of the aluminium cans for the 
purpose of levying excise duty under section 4 of the Act. lhe 'r 
appellant, anxious to avoid coercive action, filed a price 
declaration in which 
the price of 
aluminium 
cans 
was 
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calculated at the cost of production plus a margin of profit 
of 5% of the cost. However, it contended before the Excise 
Authority (i) that aluminium cans cannot be described as 
"goods" for the purposes of excise duty inasmuch as they are 
not 
marketable 
and 
are 
prepared 
for 
the 
flashlights 
manufactured by it; and (ii) that the preparation of aluminium 
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cans out of aluminium slugs did not amount to manufacture, and 
that aluminium cans were merely an intermediate product in the 
manufacture of flashlights. 
lhese contentions before the 
Excise Authority having failed, it filed a writ petition in 
the High Court. A Single Judge allowed the writ petition but a 
Di vision Bench of the High Court allowed the appeal of the 
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respondent holding that the production of aluminium cans from 
aluminium slugs amounted to manufacture and that the aluminium 'r
cans could be described as "goods" for the purposes of the 
Act. 
Allowing the appeal, 
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UNION CARBIDE LTD. v. U.O.I, 
163 
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HELD: 1. The aluminium cana produced by the appellant 
are not capable of sale to a consumer.. 
They cannot be 
described as excisable goods and, therefore, do not fall 
within the terms of section 3 of the Central Excises and Salt 
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Act, 1944 read with Entry 27 of the First Schedule thereto. 
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[ 167 G] 
2. The excise duty is an indirect tax in which the 
-;.. burden of the imposition is passed on to the ultimate 
consumer. In that context, the expression "goods manufactured 
or produced" 1111st refer to articles which are capable of being 
sold to a consumer. (166 B-C] 
Union of India v. Delhi Cloth & General Milla, [ 1963) 
Supp. l s.c.R. 586 and Sooth lihar Sagar tll.lls Ltd. etc. v. 
·~ Onion of India & Ors., (1968] 3 s.c.R. 21, relied upon. 
In the instant case, the aluminium cans prepared by the 
appellant are employed entirely by it in the manufacture of 
flashlights, and are not sold as aluminium cans in the market• 
The record discloses that the aluminium cans, at the point at 
which excise duty has been levied, exist in a crude and 
elelll!ntary form incapable of being employed at that state as a 
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component in a flashlight. The cans have sharp uneven edges 
and in order to use them as a component in making flashlight 
cases the cans have to undergo various processes such as 
triming, threading and redrawing. After the cans are tri~, 
threaded and redrawn they are reeded, beaded and anodised or 
painted. It is at that point only that they become a distinct 
and coll(llete component, capable of being used as a flashlight 
case for housing battery cells and having a bulb fitted to the 
\ 
case. 
Therefore, 
it is difficult to believe that the 
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elementary and unfinished form in which they exist i-diately 
after extrusion suffices to attract a llllrlcet. No satisfactory 
llllterial to the contrary has been placed by the respondents. 
The record discloses that whatever alwal.nium cans are produced 
by the appellant are subeeqnently developed by it into a 
co11111leted and perfected component for being employed as 
flashlight cases. (166 E-H; 167 A-C;) 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1103 of 
1972. 
From the Judgment and Order dated 22nd February, 1972 of 
the Allahabad High Court in Special Appeal No. 307 of 1971. 
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164 
SUPREME COURT REPORTS 
(1986] 2 S.C.R. 
Dr. Y.S. Chitale, T.M. Ansari, P.K. Ram and D.N. Mishra 
for the Appellant. 
R. 
Thyagarajan, 
A. 
Kumar 
and 
R.N. 
Poddar for the 
Respondents. 
The Judgment of the Court was delivered by 
PATIIAK, J. This appeal by 
High 

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