UNION OF INDIA AND ANR. versus DELHI CLOTH AND GENERAL MILLS CO. LTD.

Citation: [1997] SUPP. 1 S.C.R. 150 · Decided: 06-05-1997 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Dismissed

Judgment (excerpt)

A 
B 
c 
UNION OF INDIA AND ANR. 
v. 
DELHI CLOTH AND GENERAL MILLS CO. LTD. 
MAY 6, 1997 
[S.P. BHARUCHA, S.C. SEN AND M. JAGANNADHA RAO, JJ.) 
Excise Law: 
Central Excises and Salt Act, 1944: Taiiff Item 14-AA(J). 
Excise-Excise duty-Levy of-Calcium carbide, manufactured for 
production of acetylene gas, but not marketable due to want of pwity and 
proper packing-Held : Such calcium carbide, not excisable. 
Excise-Excise duty-Levy of-Condition precedent-Held: In order to 
D be excisable, the commodity must be marketable as it fa~ Tlie fact that by 
further processing the commodity may be made marketable, not mate1ial. 
The respondent company manufactured and sold calcium carbide in 
the market until the year 1967. Thereafter it utilised the calcium carbide 
E that it manufactured in the process of the production of acetylene gas in 
its acetylene gas plant. The calcium carbide that was manufactured was 
tapped from the furnace in liquid form, placed in trays, allowed to cool 
and solidify and thereafter broken into cakes of the required size. Called 
upon to pay excise duty on such calcium carbide, the respondent contended 
that it was not excisable being an intermediate product used for the 
F generation of acetylene gas in the factory of manufacture. 
The respondent contended that the calcium carbide produced in its 
factory was an intermediate product not marketed as such and, therefore, 
it was not an excisable commodity. The appellant-Revenue contended that 
the calcium in question was in fact marketed by the respondent till 1967. 
G The appellant-Revenue further contended that the said cakium carbide 
was in any event covered by Tariff Item 14 AA(l). The Appellate Collector 
held that the said calcium carbide produced in the respondent's factory 
was excisable. The order of the Appellate Collector was upheld by the 
Government of India in revision. The respondent thereupon filed a writ·' , 
H petition before the High Court, which was allowed. Hence this appeal. 
150 
U.0.1. v. D.C.M. [S.P. BHARUCHA, J.] 
151 
Dismissing the appeal, this Court 
A 
HELD : 1.1. The order of the Collector shows that the calcium 
carbide that was manufactured by the respondent for further utilisation 
in the production of acetylene gas was not of a purity that rendered it 
marketable nor was it packed in such a way as to make it marketable, that 
is to say, in airtight containers. This is a fact. Therefore, it has to be held B 
that the calcium carbide manufactured by the respondent is not excisable. 
[154-H; 155-A-B] 
Moti Laminates Pvt. Ltd. v. CCE, (1995) 76 ELT241 andDharangadhra 
Chemical Works Ltd. v. Union of India, (1997) 91 ELT253, relied on. 
Union of India v. Delhi Cloth & General Mills Co. Ltd., AIR (1963) 
SC 791; South Bihar Sugar Mills Ltd. v. Union of India, AIR (1968) 2 SC 
922; A.P. Seb v. CCE, [1994) 2 SCC 428; Union Carbide India Ltd. v. Union 
of India, [1986) 2 SCC 547; Bitar Industries Ltd. v. CCE, [1989) l SCC 602; 
Hindustan Polymers v. CCE, [1989) 1 SCC 323 and Indian Cable Co Ltd., 
Calcutta v. CCE, [1994) 6 SCC 610, referred to. 
1.2. Tariff Item 14-AA(l) is not attracted in the present case. The 
commodity, which is sought to be made liable to excise duty, must be a 
commodity that is marketable as it is and not a commodity that may by ·. 
further processing be made marketable. [155-C] 
c 
D 
', 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2062 of E 
1979. 
From the Judgment & Order dt. 16.2.78 of the Delhi High Court in 
CW. No. 1358 of 1975. 
AB. Divan, M.G.S. Murthy, Dilip Tandon, V.K. Verma, S. Ganesh, 
F 
R. Narain, A. Sarar, A. Mitra, Sajan Narain for M/s. JBD & Co. and Sonu 
for the appearing parties . 
.The following Judgment/Orders of the Court was del.ivered : 
S.P. BHARUCHA, J. This civil appeal arising upon the judgment and G 
order of a Division Bench of the Delhi High Court was referred to a larger 
bench on 11th March, 1997 (1~7) 91 E.L.T. 230. 
The respondent company manufactured and sold calcium carbide in 
the market until the year 1967. Thereafter it utilised the calcium carbide 
that it manufactured in the process of the production of acetylene gas in H 
152 
SUPREME COURT REPORTS (1997) SUPP. 1 S.C.R. 
A its acetylene gas plant. The calcium carbide that was manufactured was 
tapped from the furnace in liquid form, placed in trays, allowed to cool 
and solidify and thereafter broken into cakes of the required size. Called . 
upon to pay excise on such calcium carbide, the respon

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