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2010 (3) Supreme 26
SUPREME COURT OF INDIA
DALVEER BHANDARI and K.S. RADHAKRISHNAN,JJ.
Bata India Ltd. — Appellant(s)
Versus
Commissioner of Central Excise, New Delhi — Respondent(s)
CIVIL APPEAL NO. 2377 OF 2002
Decided on : 12.04.10
Facts of the Case :
The question that arose for consideration in present appeal was whether unvulcanised sandwiched fabric assembly produced in the Assessee’s factory and captively consumed can be termed as “goods” and can be classified as “rubberized cotton fabrics” falling under sub-heading number 5905.10 of the schedule to the Central Excise Tariff Act, 1985.
Findings of the Court :
Product in question was used as an intermediate product, which goes to make component for the final product. The burden to show that the product in question was marketed or capable of being bought or sold in the market so as to attract duty was entirely on the Revenue. However Revenue failed to produce any material before Tribunal to show that product was either been marketed or capable of being marketed but expressed its opinion unsupported by any relevant materials.The test of marketability is that the product which is made liable to duty must be marketable in the condition in which it emerges. No evidence had been produced by Revenue to show the product unvulcanised sandwiched fabric as such was capable of being marketed, without further Processing.The mere fact that product in question was entrusted outside for some job work such as stitching was not an indication to show that the product was commercially distinct or marketable product. Without proof of marketability intermediate product would not be goods much less excisable goods. Such a product is excisable only if it is a complete product having commercial identity capable of being sold to a consumer which has to be established by Revenue. The test report of the Chemical Examiner,SPB hand book of rubber products and the statement of Superintendent (Supply and Transportation) of assessee’s company not showed that the product in question was capable of being marketed .On the other hand materials produced by assessee showed that the product in question was only an intermediary product generally used for captive consumption which had no commercial identity as such. Impugned order of Tribunal was set aside and show cause notices issued to the assessee were quashed since the Revenue had not produced any relevant materials to show the marketability of the product. Appeal was allowed
JUDGMENT
K.S. RADHAKRISHNAN, J.
1. The question that arises for consideration in this appeal is whether unvulcanised sandwiched fabric assembly produced in the Assessee’s factory and captively consumed can be termed as “goods” and can be classified as “rubberized cotton fabrics” falling under sub-heading number 5905.10 of the schedule to the Central Excise Tariff Act, 1985.
2. The above question came up for consideration before the Customs, Excise and Gold (Control) Appellate Tribunal (for short ‘the Tribunal). The Member (Judicial) took the view that the product would not attract duty unless it is established that the goods in question is marketable or capable of being marketed as a distinct product and that the Revenue has failed to discharge the burden to prove the marketability and dutiability of the intermediate product in the manufacture of rubber/canvas foot wear. The Member(Technical), however, disagreed with that finding and held that the Revenue has discharged its burden and took the view that the goods in question attracts duty.
3. In view of the difference of opinions expressed by the two members, the matter was placed before a third member who concurred with the view expressed by the Member (Technical) and a final order was passed on the above issue by the Tribunal on 24.12.2001 holding that double textured rubberized fabric / unvulcanised sandwiched fabric is an excisable product liable to central excise duty. No opinion was expressed by any of the members on the question of exemption, applicability of notification and the quantum of penalty imposed and those issues were left to be considered when the appeal is finally posted for hearing.
4. Aggrieved by the findings of the Tribunal dated 24.12.2001 the assessee has come up before us with this appeal.
5. The Assessee is a well known manufacturer of foot wear. For the manufacture of foot wear, various raw materials are purchased by the assessee from the market and / or from their respective manufacturers such as fabrics, rubbers, chemicals, solvents etc. During the process of manufacturing of foot wear various chemicals / rubbers / solvents etc., are mixed together and a thin layer of such mixed materials is sandwiched in between two sheets of textile fabric, in running length, through a three bowl calendering machine. The product is later cut and stitched according to the assessee’s requirements and in-process materials are used as shoe- uppers in the foot wear. Such fabrics are also at times sent to job workers for stitching purposes only and the fabric sandwiched with the mixed materials are inputs of the intermediate stage during the course of manufacture of footwear. Vulcanisation of the foot wear takes place only after completing the entire process and then it would be a finished product as a footwear, made available in the market and acquires commercial identity and turns out to be a commercially known product.
6. The Collector of Central Excise (in short the Collector) noticed that during the manufacture of foot wear the assessee manufactures an excisable product called double textured fabric which is further used as upper material in the manufacture of foot wear and this double textured fabric is nothing but rubberized, water proof fabric with a thin layer of rubber sandwiched between two sheets of cotton fabric in running length. As a result of that process a double textured fabric emerges as a distinct product with specific properties and character other than that of original fabric used as input which is known in commercial trade parlance as double textured fabric which is used in considerable quantities for making rain- coats, holdalls, hand bags etc.
7. The Collector therefore, came to the conclusion that this double textured fabrics are marketable products fulfilling the requirement of the definition of excisable goods as per Section2(d) of the Central Excise 1944 (in short the Act) attracting the levy of central excise duty under the Act. The Colle
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