The main legal point established in the judgment is that the marketability of goods is essential to determine their liability for Central Excise duty. The goods must be capable of being sold in the open market to be considered marketable and liable for excise duty.

ORDER RAVI MALIMATH, C. J. : – The petitioner in both the cases are one and the same. The facts as stated in Writ Petition No. 1200 of 2006 are being narrated for the sake of convenience.

2. (a) The first petitioner is a company registered under the Indian Companies Act. The second petitioner is one of the shareholders. The first petitioner-Company is engaged in the business of hydro power generation and allied activities. It was awarded a turnkey contract relating to Vishnuprayag Hydroelectric Power Project and thereafter the Omkareshwar Hydroelectric Power Project in Writ Petition No. 10832 of 2008. It is the run-of-the-river scheme for generation of hydroelectric power on the river Alaknanda in Chamauli District in the State of Uttarakhand. The project envisages the construction of a 15 meter high and 60 meter long barrage across the river Alaknanda. The construction and erection of various gates of the diversion barrage had to take place. Various duty paid iron and steel items were brought to the petitioner’s workshop situated at Rewa. That, the said iron and steel items would be sent to the workshop and at the workshop, the various gates and other items were being prepared. That all these are required for the purpose of erection of the said project. That all these materials were purchased by the petitioner from the respective manufacturers and also from the open market. After purchase they are sent to the site at Rewa. The appropriate Central Excise duty on the said items purchased were already paid. The said fact is not disputed. The dispute was with regard to the different iron and steel items such as plates, angles, channels, beams etc., which were first brought to the petitioner’s workshop and are then subjected in the said workshop for activities of cutting, bending, welding, drilling etc., as per the requirement of the project. Thereafter, they are embedded into the said structure at the dam.

2. (b) Another turnkey project of a similar nature was awarded to the petitioner by the Narmada Hydroelectric Development Corporation in relation to the Omkareshwar project in the District of Khandwa in the State of Madhya Pradesh. The same is covered by Writ Petition No. 10832 of 2022.

2. (c) That, all these activities are being undertaken at the workshop of the first petitioner/Company. They are nothing but intermediate activities on which duty paid iron and steel items are subjected to during the course of their use. That, all the articles so prepared at the workshop are used only for the purposes of the said project. None of the articles are sold in the open market or diverted for any other purpose. However, some of the items are also diverted so far as the second project in Omkareshwar is concerned. Therefore, each and every item that is so prepared in the workshop is sent either to the project at Vishnuprayag Hydroelectric Power Project or the Omkareshwar Hydroelectric Power Project. That, the said items that are fabricated in the workshop are not useful for any other purpose or any other project. The same are prepared for the exclusive use and for the exclusive design of the project concerned.

2. (d) All the items bought by the petitioner from the market have suffered Central Excise duty. About 300 metric tons of the said iron and steel items were prepared for being dispatched at the petitioner’s workshop. Therefore, a letter dated 1st December, 2004 was addressed to the respondent No. 1/Commissioner, Customs and Central Excise requesting for confirmation that no Central Excise duty was payable by the petitioner on the said items. Yet another letter was addressed on 20th December, 2004. There was no response from the respondents. Therefore, the writ petitioner filed Writ Petition No. 417 of 2005 before this Court seeking for order to restrain the respondents from levying or demanding any Central Excise duty on the iron and steel items cleared from the petitioner’s workshop and other consequential reliefs. By the order da