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TMI Blog1996 (7) TMI 257X X X X Extracts X X X X X X X X Extracts X X X X ..... For better appreciation of the merit of the case, it is necessary to define the product Milk Crumb. The product has been described in the Bombay High Court judgment dated 16-8-1984 as follows :- "The petitioners have annexed an extract from an Article by J. Koch "Milk Crumb : The Modern Chocolate Engredient". It sets out the "Crumb" style of manufacture of milk chocolates. Milk Crumb is a special sort of cocoa-milk-sugar preparation which is used as the basic ingredient of many milk chocolates. Under this style of manufacture milk and cocoa are mixed while the milk contains an appreciable quantity of moisture. Traditionally it is a three stage process. At the first stage milk is condensed to 25-30 per cent residual moisture. Thereafter sugar is added and the product is recondensed to 14-18 per cent moisture. Cocoa mass is added to this moisture and it is followed by vacuum stove drying until the moisture has been eliminated. The product at this stage comes out of the final vacuum stove in the form of a hard brown slab or cake; sometimes also in the form of a crumbled rope of hard material. As far as the petitioners' factory is concerned, this product comes out in the form of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to another would not by itself make a product chargeable to excise duty, even in terms of Rules 9 & 49. 4. Merely because product is removed from factory cannot make the product "goods". For example, in terms of Rule 57F(3) and erstwhile Rule 56B, as also Notification No. 119/75, even semi-finished or semi-processed goods were permitted to move from one factory to another. 5. T.I. 68, although a residuary item, only applies to "goods", and could not cover non-marketable products. 6. The judgment of the Bombay High Court in WP-5051/76 cannot be construed to mean that milk crumb was chargeable to duty under T.I. 68. 6. In reply to a query learned Advocate clarified that that unit at Indori was not a separate profit centre. There were no sales. The goods moved under a challan both ways. In reply to another query he stated that the crumbs had shelf life of 2-3 months. 7. Learned DR in his counter submitted that at all times the respondents had been agitating on the classification of the impugned goods. At no time they had challenged the identity of the impugned goods as "goods" under the definition of the Central Excise Law. Even after the judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rket to be bought and sold and therefore, intermediate products like varnish arising during the process and manufacture of resin could not be termed as "goods". In their judgment in the case of U.O.I. v. Delhi Cloth and Cotton Mills - 1977 (1) E.L.T. (J 199) (S.C.) = 1990 (27) ECR 151 the full Bench of the Supreme Court held that only those goods which can come to the market to be bought and sold are excisable goods. In this case raw oil during the process of manufacture of vanaspati underwent a process where it could be termed as refined oil. This stage was held to be a dutiable stage by the Department. Hon'ble Supreme Court rejected this claim on the observation that the oil under process did not become at any stage refined oil as was known to the consumers and the commercial community. 11. There had been some instances where the intermediate goods were clearly not marketable but there was a tariff entry covering such goods. In such a case the Supreme Court in the case of Bhor Industries Ltd. - 1989 (40) E.L.T. 280 observed that an article was not liable to excise merely because of its specification in the Tariff Schedule unless it was known in the market as "goods". The Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market in western countries. Similarly there is nothing which would indicate that crumb is sold as chocolate in western countries. In the present case there is absolutely no material on record which would suggest that milk crumb is marketed in western countries as chocolates or that it is understood in common parlance in western countries as chocolates. Even assuming that to be so, such common parlance in western countries is not relevant for the purpose of construing a tariff item in our country. There is no material on record which would show that milk crumb is either understood in common trade parlance in our country as chocolates or that it is marketed as chocolates. That milk crumb falls within the tariff item 1A. Thus, in the case of Colgate Palmolive (India) Ltd. v. Union of India and others reported in 1980 Excise Law Times p. 268 Lentin J. observed that if the department wants to classify a product under a particular tariff item, then it is for the department to establish that the said product is liable to duty under that particular tariff item and it is not for the manufacturer to establish a negative. I may also refer in this connection to my decision in Garware N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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