COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-IversusM/S. MARKFED VANASPATI AND ALLIED INDUSTRIES

A            COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I
                                            V.

            MIS. MARKFED VANASPATI AND ALLIED INDUSTRIES

                                     APRIL 9, 2003

B                       [S.N. VARIA VA AND H.K. SEMA, JJ.]


            Excise Tari.fl Act, 1985; Tari.fl Item 1507:

            Classification-Spent earth-Levy of excise duty-Tests of manufacture
C and marketability-Significance of-Held: goods though covered by tariff entry
    may not be excisable unless it satisfies the tests of 'manufacture and
    marketability '-The product ''<;:ent earth" remains 'earth' even after
    undergoing processing-Burden to prove is on Revenue-Revenue failed to
    produce evidence of marketability and manufacture-Since excise duty on the
D   product 'earth' levied and paid by assessee, levy of excise duty on 'spent
    earth' would amount to double levy on the same product.

            Words and Phrases:

            Marketability and Manufacture '-Meaning of in the context of excise
E   laws.

         The questions which arose in these appeals were whether "spent
    earth" is excisable merely because it falls within a tariff entry and whether
    the well settled tests of 'manufacture and marketability' cease to apply if
    goods falls within tariff entry.
F
          It was contended for the Revenue that since goods 'spent earth' falls
    within one of the tariff items, it becomes excisable.

            Answering both the questions in the negative, the Court

G         HELD: I.I. Prior to the entry of 'spent earth' as tariff item in the
    Excise Tariff Act, it had been consistently held that the product "spent
    earth" was not manufactured; that "spent earth" remained "earth" even
    after undergoing processing; that its absorption capacity was reduced; that
    duty having been paid on "earth", no duty was leviable on "spent earth"
H                                          480
             COMMIR. OF CENTRAL EXCISE 1•. MARKFED VANASPATI AND ALLIED INDUS.   48 J
     as it remained the same product; and that levying of duty on "spent earth"         A
     would amount to double levy. Hence the product "spent earth" was not
     excisable. (482-F-GI

            1.2. A larger Bench of the apex Court in the case of *Collector of
     Central Excise, Indore v. Universal Cable Ltd., (1995) Supp. 2 SCC 465 held
     that a good does not become excisable because it is covered by Tariff entry. B
     Subsequently in the case of **Mis. Cadila Laboratories Pvt. Ltd. v. CCE,
     Vadodara in C. A. No. 6745 of 1999 decided on 13.2.2003 this Court held
     that merely because an item falls in a Tariff Entry, it does not become
     excisable unless there is manufacture and the good is marketable. Thus,
     it is not possible to accept the contention that merely because an item falls C
     in a Tariff Entry it must be deemed that there is manufacture. The law
     still remains that the Revenue must prove that there is manufacture. In
     the instant case no new evidence is placed to show that there is
     manufacture. The product 'spent earth' remains earth even after the
     processing. Since excise duty was already levied on earth and paid by the
     assessee, any levy of excise duty on spent earth thereon would amount to D
     levying double duty on the same product. 1483-E-F, G, H; 484-AI

          *Collector of Central Excise, Indore v. Universal Cable Ltd., (19951
     Supp. 2 SCC 465, followed.

         B.P.L. Pharmaceuticals Ltd. v. Collector ofCentral Excise, (19951 Supp.        E
     3 SCC I, relied on.

           Lal Woollen & Silk Mills (P) Ltd., Amritsar v. Collector of Central
     Excise, Chandigarh, (19991 4 SCC 466, distinguished.

           **Mis. Cadila Laboratories Pvt. Ltd. v. CCE, Vadodara,(20031 4 SCC
                                                                                        F
     12, referred to.


--        CIVIL APPELLATE JURISDICTION: Civil Appeal No. 77-80 of2001.

          From the Judgment and Order dated 12.11.1999 of the Customs Excise,           G
     and Gold (Control) Appellate Tribunal, New Del.hi in A. No. E/32, 299/90-
     C, 3134/91-C, 309/92-C in F. 0. Nos. E/102-105 of 1999.

                                          WITH

          C.A. Nos. 7668, 1074 of 2001.                                                 H
                                                                                      ;
                                                                                          ...
    482                    SUPREME COURT REPORTS                    [2003) 3 S.C.R.

A         Raju Ramachandran, Additional Solicitor General, Hemant Sharma,
    Sanjiv Sen and B. Krishna Prasad for the Appellant.

          Rajesh Mehale for the Respondents.

          The Judgment of the Court was delivered by
B
          VARIA VA, J. These appeals are against the judgment of the larger
    bench of the Customs, Excise and Gold (Control) Appellate Tribunal
    (CEGA T). The question for consideration is whether "spent earth" is liable
    to excise duty or not. Under the Tariff, prior to its amendment in 1985, it had

C
    been consistently held that "spent earth" was not liable to duty. However,
    with the enforcement of new Tariff in 1985, a conflict arose between various
    benches of the Tribunal. Some benches held that "spent earth" was still not
                                                                                          -
    excisable, whereas other benches held that, as it now stood included by a
    specific sub-heading, it became excisable. In view of these conflicting
    decisions, the matter was placed before the larger Bench of the CEGAT
D   which by the impugned judgment has held that "spent earth" was still not
    dutiable. Hence these Appeals.

           The only question for consideration for us is whether a goods becomes
    excisable merely because it falls within a tariff item. After 1985 Tariff item
    1507 reads as "residue resulting from the treatment of fatty substances". It is
E   submitted that "spent earth" is a residue resulting from treatment and is thus
    now excisable. What we have to consider is whether the well settled twin
    tests of "manufacture and marketability" cease to apply if a good falls within
    a tariff entry.

F          Prior to this Entry being introduced in 1985, it had been consistently
    held that "spent earth" was not manufactured. It had been consistently held
    that "spent earth" remained "earth" even after processing. It had been
    consistently held that all that happened was that its capacity to absorb was
    reduced. It had been consistently held that duty having been paid on "earth'',
    no duty was leviable on "spent earth" as it remained the same product. It had
G   been held that to levy duty on "spent earth" would amount to levying duty
    twice. It is on this ground that it has been held that "spent earth" was not
    excisable. Even now it has not been shown that there is manufacture. The
    only submission is that "spent earth" is a residue resulting from the treatment
    of fatty substances. The submission is that now that there is a specific Entry
H   which makes "residue resulting from the treatment of fatty substances"
 COMMIR. OF CENTRAL EXCISE 1•. MARKFED VANASPATI AND ALLIED INDUS. [VARIAVA, J.] 483


excisable, duty has to be paid on "spent earth". In other words, what is               A
submitted is that merely because a good falls within one of the Tariff items
it becomes excisable.

     Jn support of their submission, reliance is placed on the case of Lal
Woollen & Silk Mills (P) Ltd., Amritsar v. Collector of Central Excise,
Chandigarh, reported in [1999] 4 sec 466. In this case the question was                B
whether excise duty was to be paid on dyed worsted woolen yam made from
duty paid worsted woolen grey yarn. It was argued that there was no
manufacture. The Court however held as follows:

        "Admittedly both "dyed yarn" and "grey yarn" are covered by two                C
        separate distinct heads of tariff items with different duty. So this
        itself recognizes them to be two different goods with separate levy.
        In view of this it cannot be urged that there is no manufacture of
        "dyed yarn" from the "grey yam".

      Undoubtedly this authority appears to support the contention which is            D
raised.

       However, it appears to us that the observation made in this authority
are "per incuram". In so observing, the decision of a larger Bench of this
Court in the case of Collector of Central Excise, Indore v. Universal Cable
Ltd. reported in [1995] Supp. 2 SCC 465, has not been noted or considered.             E
In this case an argument that a goods become excisable because it is covered
by Tariff Entry, has been negatived. In the case of B. P. L. Pharmaceuticals
Ltd. v. Collector of Central Excise reported in [1995] Supp. 3 SCC I it has
also been held that merely because there is a change in the Tariff Item the
goods does not become excisable. Subsequently in a judgment dated 13th                 F
February, 2003 in Civil Appeal No. 6745 of 1999 it has been held that
merely because an item falls in a Tariff Entry, it does not become excisable
unless there is manufacture and the good is marketable. In Lal Woolen & Silk
Mills' case (supra) it has not been held that the twin test of manufacture and
marketability is not to apply. It is not possible to accept the contention that
merely because an item falls in a Tariff Entry it must be deemed that there            G
is manufacture. The law still remains that the burden to prove that there is
manufacture and that what is manufactured is on the revenue. In this case no
new evidence is placed to show that there is manufacture. "Spent earth" was
"earth" on which duty has been paid. It remains earth even after the processing.
Thus if duty was to be levied on it again, it would amount to levying double           H
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    484                   SUPREME COURT REPORTS                  [2003] 3 S.C.R.

A duty on the same product.
         Under the circumstances, we find no infirmity in the impugned judgment.
    The Appeals stand dismissed. There shall be no order as to costs.

    S.K.S.                                                  Appeals dismissed.
B