Board of Trustees v. Collector, Central Excise, A.P., (SC) BS196940
SUPREME COURT OF INDIA

Before:- S.H. Kapadia and B. Sudershan Reddy, JJ.

Civil Appeal No. 8375 of 2001. D/d. 16.8.2007.

Board of Trustees - Appellant

Versus

Collector, Central Excise, A.P. - Respondent

A. Central Excise Act, 1944 Sections 2(f) and 3 Requirement to constitute "goods" for excisability - Relevant criteria for - In order to constitute "goods" the twin tests namely process constituting manufacture and marketability have to be satisfied.

[Para 3]

B. Central Excise Act, 1944 Sections 2(f) and 3 Marketability of product - Test of, fulfilment of, scope - Goods are manufactured with the object of being sold in the market - If the goods are not capable of being sold then they are liable to excise duty.

[Para 3]

C. Central Excise Act, 1944 Sections 2(f) and 3 Evidence Act, 1872, Sections 102 and 103 - Manufacture and marketability of goods - Burden of proof of, on whom lies - Held, the burden is on the Department to prove whether there is the process which constitutes manufacture and secondly whether the produce is marketable - In the absence of marketability goods are not excisable.

[Para 3]

D. Central Excise Act, 1944, Section 3 - Cement Concrete Armour Units used by the port trust for the installation of break waters in the outer harbour for purpose of keeping the water clam and tranquil - Concrete armour blocks are of certain specifications and are made to order - No evidence to show that said units are brought and sold in the market as a commodity - Tribunal holding them liable to excise duty - Question of marketability not discussed by tribunal - Impugned judgement of Tribunal.

[Para 4]

ORDER

1. The short question which arises for determination in the civil appeal filed by the Visakhapatnam Port Trust is whether the Cement Concrete Armour Units constitute excisable goods?

2. The assessee is Visakhapatnam Port Trust. It is a statutory body established under Major Port Trust Act 1963. The Department has taken the view that Cement Concrete Armour Units (CCAU) used by Port Trust for the installation of break waters in the outer harbour for purpose of keeping the water calm and tranquil is excisable under Central Excise Act.

3. Therefore, the principal question involved in this civil appeal relates to exigibility of Cement Concerte Armour Units. At the outset we may state each of these units weight is about 50 metric tones. They are like Tripods which also keep the water calm and tranquil. In order to constitute "goods" twin tests have to be satisfied, namely, process constituting manufacture and secondly marketability. In the present case the second test of marketability is in issue. It is well-settled that goods are manufactured with the object of being sold in the market. If the goods are not capable of being sold then the test of marketability is not fulfilled. Further, the burden is on the Department to prove whether there is the process which constitutes manufacture and secondly whether the product is marketable.

4. Coming to the facts of the present case we have examined the literature concerning Port Engineering as well as the contract entered into by the Port Trust which indicates that concrete armour blocks are essentially in prisomoid form. These blocks or units are made to order. They are of certain specifications. They are harbour or location specific. It would depend on the water level required to be maintained in the harbour. There is no evidence to show that these blocks could be used in any other harbour. This is where we have stated that each unit is meant for a particular location. Lastly, in the present case there is no evidence coming from the side of the Department to show that the said Cement Concrete Armour Units are bought and sold in the market as a commodity.

5. Surprisingly, we find that on the point of the marketability there is no discussion whatsoever in the impugned judgment of the Tribunal. The Tribunal has not gone into the question of marketability.

6. For the aforestated reasons we find merit in this civil appeal filed by Visakhapatnam Port Trust. Accordingly civil appeal stands allowed with no order as to costs.

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