1988 (10) TMI 45 - HC - Central Excise

Summary

Issues:
- Levying duty on a product at an intermediate stage in the manufacturing process of varnish.
- Determining whether the product at the intermediate stage is capable of being marketed or sold to consumers.

Analysis:
The case revolved around the imposition of duty on a product at an intermediate stage in the manufacturing process of varnish. The product in question was described as a brown viscous sticky mass in an unfinished condition, deemed incapable of being marketed in that state. Dr. S.P. Potnis provided crucial insights through an affidavit, highlighting that the product did not meet the standard characteristics of resin based on various properties such as melting/softening points and chemical composition. The product was identified as a mixture of components rather than a single entity, making it unsuitable for various industrial applications like textile fiber, molding, or FRP construction.

Moreover, referencing a previous judgment by the Supreme Court in Union Carbide India Ltd. v. Union of India and Others, it was emphasized that excise duty is typically imposed on articles capable of being sold to consumers. The Court reiterated that for an article to qualify as "goods" subject to excise duty, it must be something that can be ordinarily brought to the market for sale. This principle underscored the requirement for the product to be marketable or commercially viable to attract excise duty.

In light of the above arguments and legal principles, the learned single Judge's decision to allow the writ petition and make the Rule absolute was deemed appropriate and legally sound. The judgment upheld the position that the product at the intermediate stage, being unsuitable for direct consumer use and lacking marketability, should not be subjected to duty. Consequently, the appeal was dismissed, affirming the initial ruling in favor of the petition challenging the imposition of duty on the unfinished product during the manufacturing process of varnish.