TMI Blog1994 (3) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner this in-process material has no independent identity and it is not marketable and therefore, it is not "goods" covered by the provisions of the Act. Petitioner has described the entire process as follows :- "The entire process of manufacturing Plexol-150 takes place in a large kettle. Different monomers are added into the kettle and after regulating the temperature and adding certain catalysts to the kettle and diluting the content of the kettle with dilution oil, the end-product Plexol-150 is obtained. The entire process from the beginning to the final stage is carried out in the same kettle in a continuous, uninterrupted and integrated process." 2.The petitioner asserts that this is not resin known to the market at all and is never bought and sold. This in-process material, though is a molten liquid, comes into existence as such at an intermediate stage in a continuous and integrated process. In para 5 of the writ petition the petitioner has described the process as follows :- "The entire process of manufacture of Plexol-150 is carried out in a single unit in a continuous, uninterrupted and integrated process. In the process different monomers are weighed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in polymerizing the unreacted monomers. In this manner the monomers are polymerized. During the entire process of polymerization the process is carried out in an inert atmosphere (by addition of nitrogen). This ensures that no decomposition takes place and this facilitates proper polymerization. This intermediate product so obtained is maintained at a high temperature of over 122oC to ensure that it does not become a solid mass. However, even at this high temperature, it is a very thick liquid mass in molten condition. If the temperature is not so maintained, the product would become a solid mass and become totally unfit for use. In order to make this intermediate product marketable, it is necessary to dilute the thick mass with dilution oils (mineral oils). For the purpose of adding dilution oil, the high temperature of molten mass is maintained, otherwise, the dilution process would also not be possible. Only after dilution oil is added, and a solution is obtained, which is called Plexol-150. This end product in solution is known as Plexol-150. "At the earlier stage, prior to the addition of oil, the intermediate product is not marketable. In that form or condition it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resin" falling under Tariff Item 15A. Petitioner paid the duty under protest as per the petitioner's letter dated 23-4-1976. In August, 1976 the Assistant Collector classified the end product as falling under tariff item No. 68. However, regarding the in-process material he opined that duty shall have to be paid under Tariff Item 15A. Petitioner paid duty under protest accordingly. Petitioner also pointed out that the in-process-material cannot be taxed under the Act. Petitioner pointed out that the material was not known as `resin' in the trade and that material had only a temporary identity at an intermediate stage. The petitioner also contended that Rule 9, as it then stood was not applicable because there was no removal of the alleged goods. This protest was reflected in the letter of the petitioner dated 4-7-1977 (Annexure `D'). However, the petitioner was directed to file the classification list in terms of the opinion formed by the Revenue. The petitioner persisted in its protest. Show cause notices were issued to the petitioner by the Excise Department and there was also a demand levying duty on the in-process-material as well as the end product. Petitioner filed an appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isation. 7.In the meanwhile the petitioner was agitating for the re-classification of the goods during the subsequent period also. But the request of the petitioner was rejected by the Assistant Collector (4th respondent) on 1-5-1982. The Assistant Collector held that a decision has already been given which was confirmed in appeal that the relevant product was falling under Tariff Item 15A(i)(ii). In the order (Annexure R) the Assistant Collector also held that there was no substance in the argument that the product has not been marketable and the fact that the product is useful for further manufacture indicates that the product is marketable and not waste. The Assistant Collector has clearly indicated that according to him the product in question is marketable because the said product is useful for further manufacture. The order nowhere states as to how and where the product in question could be marketed and in fact whether any particular market exists and whether the product in question, which came into existence at the intermediate stage is capable of being marketed. 8.In view of the amendment of Rule 9 the petitioner thought it fit to challenge the validity of the Rule by f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al ground of attack against the action of the respondents was based on the challenge to the validity of Rule 9 of the Rules. Further, the second respondent before whom the revision application was pending was situated at New Delhi. After the amendment of the Act the revision application stood transferred to the 7th respondent which is situated at New Delhi. The order of the 5th respondent made in May, 1982, at Bombay was in effect an order following the earlier order which was already the subject-matter of the revision petition before the second respondent. Having regard to these aspects we are of the considered view that this Court had not only jurisdiction to entertain the writ petition but continues to have the jurisdiction to decide the writ petition, even though the challenge to Rule 9 does not survive in view of the decision of the Supreme Court in J.K. Spinning Weaving Mills Limited Another v. Union of India and Others; 1987 (32) E.L.T. 234. The validity of the rule has been upheld by the Supreme Court in the aforesaid decision. 12.Further the learned Counsel for the Central Government also did not seriously question our jurisdiction to entertain the writ petition havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ketable, they are goods for the purposes of Section 3. It is not also necessary that the goods in question should be generally available in the market. Even if the goods are available from only one source or from a specified market, it makes no difference so long as they are available for purchasers. Now, in the appeals before us, the fact that in Kerala these poles are manufactured by independent contractors who sell them to Kerala State Electricity Board itself shows that such poles do have a market. Even if there is only one purchaser of these articles, it must still be said that there is a market for these articles. The marketability of articles does not depend upon the number of purchasers nor is the market confined to the territorial limits of this country." The above observations were relied upon to contend that existence of a market for the particular goods is not necessary to hold the article in question as `goods'. 15.We are of the view that this is not the correct reading of the above observations of the Supreme Court. The Supreme Court made it clear that so long as articles in question are available for purchasers the articles could be considered as `Goods', and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (43) E.L.T. 214, have a strong bearing in the present case. The assessee, respondent contended that starch hydrolysate was not being marketed and is not capable of being marketed and therefore was not dutiable. The contention was accepted and the Supreme Court made the following observations :- "The case of the respondent had always been that starch hydrolysate was not being marketed and is not capable of being marketed in view of its highly unstable character resulting in fermentation even if kept for a day or two. Shri Ganguly appearing for the revenue sought to urge that the Tribunal was wrong in approaching the problem in that light. The test was not whether the starch hydrolysate was not of a highly unstable character and resulted in fermentation even in a day or two, but whether it was capable of being marketable. He submitted that the test applied was not the true test. He urged that even transient items of articles can be goods, provided that these were known in the market as distinct and separate articles having distinctive and separate uses, these would still become goods if these were capable of being marketed even during short period. From a conceptual and jurisprude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no such removal levy under the Act cannot be imposed on the said intermediate product. 22.It is a well known rule of construction that the deeming provision shall have to be confined to the purpose for which it is enacted. Explanation nowhere deems every kind of transient intermediate product as goods. If that is the intention the proper step would have been to add an appropriate explanation to the definition of the "goods" under the Act. 23.In J.K. Spinning Weaving Mills Ltd. and Another v. Union of India and Others, 1987 (32) E.L.T. 234 the Supreme Court had an occasion to make the following observations as to the scope of Rule 9. In para 39 of the Judgment the Supreme Court observed as follows :- "It is well settled that a deeming provision is an admission of the non-existence of the fact deemed. Therefore, in view of the deeming provisions under Explanations to Rules 9 and 49, although the goods which are produced or manufactured at an intermediate stage and, thereafter, consumed or utilised in the integrated process for the manufacture of another commodity is not actually removed, shall be construed and regarded as removed." The above observation is a complete answe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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