Judgement

SABYASACHI MUKHARJI, J.:- This is an appeal under Section 35L(b) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). The appeal is directed against the order dated 2nd November, 1987 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as the Tribunal). The respondent, viz., M/s. Ambalal Sarabhai Enterprises manufacture sorbitol falling under item 68 of the erstwhile Central Excise Tariff. There was a visit to the factory premises of the respondent by the Central Excise Officers on 26th February, 1985. It was alleged that it was found that the respondent manufactured and captively consumed starch hydrolysate but the respondent had failed to take out a licence with reference to the said manufacture of starch hydrolysate and had been removing the same without, according to the appellant, payment of duty and without observing the necessary central excise formalities. It was the view of the revenue that starch hydrolysate was glucose and, therefore, fell under Item I -E of the Central Excise Tariff, which covered glucose in whatever form including liquid glucose. Accordingly, a show cause notice was issued to the respondent. A reply was. filed on behalf of the respondent contending that starch hydrolysate was not "goods" since the same was not marketable and, therefore, no excise duty would be payable on the same. In those circumstances, it was submitted that the proposed adjudication by the Collector following the aforesaid notice was without jurisdiction in view of Section 11 A of the Act. It was urged that starch hydrolysate is not glucose and that even if the same was liable for duty it would not be under item 1-E. According to him, starch hydrolysate was an intermediate product in the manufacture of sorbitol and no duty could be demanded on the same. There were adjudication proceedings thereafter. In the said proceedings, affidavits were filed on behalf of the respondent, witnesses on behalf of the revenue were cross-examined and the Collector also cross-examined the witnesses of the respondent. By an order dated 6th December, 1985, the Collector of Central Excise, Baroda rejected the contention of the respondent. It was held by him that starch hydrolysate was glucose and fell under item 1-F of the Central Excise Tariff and that the respondent had suppressed the fact of manufacture thereof for consumption in the further manufacture of sorbitol. In the premises, he ordered the respondent to pay excise duty amounting to Rs. 34,929,559.55 paise and imposed a penalty of Rs. 10 lakhs. Aggrieved by the said order of the Collector, the respondent preferred an appeal before the Tribunal. The Tribunal by its order dated 2nd November, 1987, being the order under appeal, held that starch hydrolysate manufactured by the respondent is not and never was marketable commodity, and hence that would not be "goods" on which excise duty could be charged. In the premises, the Tribunal allowed the appeal filed by the respondent and set aside the order of the Collector. Aggrieved thereby, the appellant has come up in appeal to this Court under Section 35L(b) of the Act.

2. On behalf of the appellant, Shri Ganguly contended that the Tribunal misdirected itself in applying the proper test for the determination of the question. He urged that the true test to determine in a matter of this nature was to consider not only whether starch hydrolysate was actually marketable but also to consider whether conceptually the said goods in question were capable of being marketable. It was urged by Shri Ganguly that the Tribunal had misdirected itself in not appreciating this aspect of the matter and did not as such examine or view the evidence on record in the proper perspective. He urged that in the aforesaid light and in view of the findings made by the Collector, there was no ground for the Tribunal to interfere with the, order of the Collector. He further submitted that in