IMPORTANT POINT
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 proceeding be made marketable.

JUDGMENT

S.P. Bharucha, J.-This civil appeal arising upon the judgment and order of a Division Bench of the Delhi High Court was referred to a larger bench on 11th March, 1997 (1997(91) E.L.T. 230).

2. 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 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 generation of acetylene gas in the factory of manufacture. The order of the Superintendent Central Excise, Kota Division, being against the respondent, it preferred an appeal to the Appellate Collector, Central Excise, New Delhi. He enquired into the process of manufacture of the calcium carbide in the respondent s factory and observed that the enquiry had confirmed the respondent s contention that the calcium carbide produced in its factory was an intermediate product and was not marketed by the respondent. The enquiry also revealed that the calcium carbide, which was initially produced in the form of cakes, was broken into smaller pieces after the cakes attained room temperature and the broken pieces were forthwith put into use for the production of acetylene gas. The Appellate Collector added :

"This confirms their contention that the calcium carbide is not produced to the purity as required in the specification laid down by the Indian Standards 1040/60 nor the carbide is packed in any containers for the purpose of storage for any length of time."

The Appellate Collector noted that the calcium carbide which was sold in the market was packed in airtight containers and conformed to the I.S.I. specifications. However, he declined to accept the respondents contention that the calcium carbide produced by it, being not marketed as such, was not an excisable commodity. In his view, calcium carbide as occurring at Tariff Item 14AA(1) had not been qualified by any description so that the calcium carbide produced in the respondents factory was excisable. The order of Appellate Collector was upheld by the Government of India in revision. It was found that in chemical description and physical properties what was manufactured by the respondent was calcium carbide irrespective of whether or not it conformed to any specification. The respondent thereupon filed a writ petition before the Delhi High Court and, by the order under appeal, the writ petition was allowed, it being found that the calcium carbide manufactured by the respondents was not marketable.

3. When this civil appeal against the Delhi High Court s judgment reached hearing before a bench of two learned Judges, counsel on behalf of the respondent relied upon the judgment of a bench of three learned Judges of this Court in the case of Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad1, and contended that goods which were not marketable or acceptable in the market as a commercial commodity could not be subjected to excise duty. The bench was of the view that, reliance having been placed on the Moti Laminates judgment, this appeal should be heard by a larger bench. The papers having been placed before the Hon ble the Chief Justice, the appeal is now placed before us.

4. The first question to which we address ourselves is whether the Moti Laminates judgment requires to be looked into again. Sahai, J., speaking for the bench of three learned Judges, noted that excise duty was levied by virtue of the provisions of Entry 84 of List 1 of the Seventh Schedule of the Constitution on goods which were manufactured or produced, which was why the charge under Section 3 of the Central Excise and Salt Act was on all