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PETITIONER: BHOR INDUSTRIES LTD., BOMBAY

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, BOMBAY

DATE OF JUDGMENT31/01/1989

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1989 AIR 1153            1989 SCR  (1) 382  1989 SCC  (1) 602        JT 1989 (1)   450  1989 SCALE  (1)226  CITATOR INFO :  R          1989 SC2066  (5)  R          1990 SC  59  (4)  R          1990 SC1676  (11)  R          1990 SC1893  (4)  RF         1991 SC 999  (7)

ACT:     Central Excises and Salt Act, 1944/Central Excise Rules, 1944:  Sections  2(d), 2(f), 3, 35-L  and  35-P/Rules,  10-A 173-J.     Excise duty--Excisable goods--Mere fact that an  article falls within Tariff Schedule is not enough--Taxable event is ’manufacture  of goods’--Which are marketable or capable  of being marketed-Marketability is an essential element--Burden of proof on revenue that goods are marketable.     Central   Excise  Tariff  Act,   1985:   Schedule   Item 15-A(2)-Production           of          crude           PVC films--Non-marketable--Intermediate    products--Used    for captive   consumption  in  end  products  such  as   leather cloth--Laminated jute mattings and PVC tapes--Whether  clas- sifiable and liable to duty. Words and Phrases: ’Excisable goods’-’Manufacture’--Meaning of.

HEADNOTE:     The  appellant is a manufacturer of Crude PVC films  for the  purpose of use in final products such as leather  cloth and laminate jute mattings and PVC tapes both insulation and adhesive.  The  films  manufactured by  the  appellant  were subject  matter  of adjudication by the  Excise  authorities during  the period commencing from 1st March, 1970  to  29th May,  1971. The Appellate Collector of Central Excise by  an order  dated 14.1.1974 held that the appellant had  produced sufficient  evidence to prove that the said Crude PVC  films were not marketable and were therefore not liable to  excise duty.  On  20.11.1975 the appellant filed  a  classification list in respect of Crude PVC films used for lamination  with jute  and  for tapes claiming that the said PVC  films  were non-excisable on the ground that the same were  non-marketa- ble  intermediate  products  used  exclusively  for  captive consumption.  On 9.12.1975 the classification list  was  ap-

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proved by the Assistant Collector, Central Excise. On 15.2.1977, however, the Assistant Collector issued a show 383 cause notice calling upon the appellant to show cause as  to why  the  aforesaid  films should not  be  re-classified  as excisable under Item No. 15A(2) of the Central Excise Tariff Schedule and appropriate duty not recovered under Rule 10 of the  Central  Excise Rules, as these then stood,  read  with Rule  173-J. By a corrigendum, dated 23.2.1977, to the  said show cause notice Rule 10-A was substituted in place of Rule 10.  The  appellant contested the notice but  the  Assistant Collector vide his order dated 16th February, 1978 confirmed the  said  show cause notice by holding that  the  said  PVC films  were classifiable under Item No. 15A(2) and  directed the  appellant to pay duty at the appropriate rate  on  past clearances under Rule 10-A read with Rule 173-J.     The appeal filed against the aforesaid order was reject- ed  by  the Appellate Collector of Central  Excise  on  10th October,  1979.  A revision was  preferred  before  Customs, Excise  and Gold (Control) Appellate Tribunal. The  Tribunal confirmed the order of the Appellate Collector and held that the goods in question fell under Tariff Item No. 15A(2)  and were  dutiable in the intermediate list and the question  of marketability  or being capable of being sold in the  market was not relevant, but modified the order to the extent  that duty  in  respect of clearances prior to the issue  of  show cause  notice  was restricted to the period  permissible  in terms of Rule 10 read with Rule 173-J viz. 12 months.   In the statutory appeal to this Court under Section  35-L, of  the Central Excises and Salt Act, 1944 the question  for consideration  was whether the Crude PVC film  was  dutiable under Item No. 15A(2). Allowing the appeal,     HELD:  1.  In view of the  Appellate  Collector’s  order holding  that the Crude PVC films were not marketable  goods and  there being no contrary evidence found by the  Tribunal subsequent  to  the finding by the  Appellate  Collector  no excise  duty should be charged under Item No. 15A(2) of  the Central Excise Tariff on the Crude PVC Sheets. The  Tribunal went  wrong  in not applying the proper test.  The  test  of marketability  or capable of being marketed was not  applied by the Tribunal. [395D-E]     2.  Under  the Central Excise Act, as it  stood  at  the relevant  time,  in order to be goods as  specified  in  the entry  the first condition was that as a result of  manufac- ture  goods  must come into existence. For  articles  to  be goods these must be known in the market as such or these 384 must be capable of being sold in the market as goods. Actual sale  in  the market is not necessary, user in  the  captive consumption is not determinative but articles must be  capa- ble  of being sold in the market or known in the  market  as goods. Taxable event in the case of duties of excise is  the manufacture  of  goods and the duty is not directly  on  the goods but on the manufacture thereof. The manufacturer could not  be taxed unless manufacturing process resulted in  pro- duction  ’of goods as known in the market’.  The  expression "goods  manufactured or produced" must refer to goods  which are capable of being sold to the consumer. [389B-C; 391F]     Union of India v. Delhi Cloth and General Mills,  [1963] Suppl.  1 S.C.R. 586; South Bihar Sugar Mills Ltd.  etc.  v. Union  of  India & Ors, [1968] 3 S.C.R.  21;  Union  Carbide India Ltd. v. Union of India, [1986] 2 S.C.C. 547;  Governor General  in Council v. Province of Madras, [1945]  7  F.C.R. 179; In Re. the Bill to Amend S. 20 of the Sea Customs  Act,

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1878  and  Section 3 of the Central Excises  and  Salt  Act, 1944, [1964] 2 S.C.R. 787; applied.     3.  Simply  because a certain article falls  within  the Schedule  it would not be dutiable under excise law  if  the said article is not ’goods’ known to the market. Marketabil- ity,  therefore, is an essential ingredient in order  to  be dutiable under the Schedule to the Central Tariff Act, 1985. [392F-G]     3.1.  In the instant case, the Crude PVC films  as  pro- duced  by  the appellant were not known in  the  market  and could  not  be  sold in the market and  were  therefore  not capable of being marketable. [392G-H]

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 2820  of 1984.     From  the  Order  dated 25.4.84/4.5.84  of  the  Customs Excise  and Gold (Control) Appellate Tribunal, New Delhi  in Appeal No. F.D. (SB)(T) A. 999/80-C in Order No. 223/84.     Harish  N. Salve, Mrs. P.S. Shroff, J.M. Patel and  S.A. Shroff for the appellant.     B. Dutta, Additional Solicitor General, Ms. Indu  Malho- tra and C.V.S. Rao for the respondent. The Judgment of the Court was delivered by 385     SABYASACHI MUKHARJI, J. This is an appeal under  Section 35L  of the Central Excises and Salt Act, 1944  (hereinafter referred to as ’the Act’) from the order passed and judgment delivered on 25th April, 1984/4th May, 1984 by the  Customs, Excise  and  Gold (Control) Appellate  Tribunal,  New  Delhi (hereinafter  referred to as ’the Tribunal’).  The  question involved  is  whether the crude PVC film  is  dutiable.  The appellant is, inter alia, a manufacturer of crude PVC  films for  the  purpose of use in final products such  as  leather cloth and laminate jute mattings and PVC tapes--both insula- tion and adhesive. The said crude PVC films are manufactured by  the  appellant in a continuous process  in  the  factory premises of the appellant which are licensed premises  under the Act. The appellant filed classification list No.  XIV/75 dated 20th November, 1975 in respect of crude PVC films used for  lamination  with jute and for tapes claiming  that  the said  PVC  films were non-excisable on the ground  that  the same  were nonmarketable  intermediate products used  exclu- sively for captive consumption. The said classification  was approved  by the Assistant Collector, Central Excise on  9th December, 1977.     There was an order passed by the Appellate Collector  on 14th  June, 1974 holding that crude PVC films were not  mar- ketable and were not liable to excise duty. It is  necessary to  refer to the Tariff Entry involved in this case.  Tariff Item 15-A(2) of the Central Excise Tariff reads as follows:               "Articles made of plastics, all sorts  includ-               ing tubes, rods, sheets, foils, sticks,  other               rectangular  or profile shapes. whether  lami-               nated  or not, and whether rigid or  flexible,               including  levy  flat  tubings  and  polyvinyl               chloride sheets, not otherwise specified." The same crude PVC films which have been manufactured by the appellant  and  used in the manufacture of  some  other  end product were subject-matter of adjudication by the concerned authorities in the period 1.3.1970 to 29.5.1971. The  Appel- late  Collector  of Central Excise in an  order  dated  14th January,  1974 held that the said PVC films manufactured  by

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the  appellant are not marketable intermediate products  and hence  not liable to duty. The Appellate Collector,  Central Excise  in his order noted the contentions of the  appellant that the appellant had produced sufficient evidence to prove that  the crude PVC sheets which were the subject-matter  of the  Show Cause Notice in that case and which are  also  the subject-matter  of  the present show cause notice  were  not known in the market as PVC sheets nor were 386 these marketable as PVC sheets. After reference to the rival contentions, the said Appellate Collector in his order held, inter alia, as follows:               "PVC  films/sheets for the clearance of  which               demand  letters are issued are not  marketable               as  the same are neither embossed nor  printed               nor  any finishing Work is done when  compared               to  PVC  films/sheets which  are  marketed  by               them.  It was further stated that the  tensile               strength  of PVC sheets which is  marketed  by               the  appellants  is as per  the  international               standards laid down by A.S.T.M./I.S.I. and  is               much higher than the crude PVC sheets manufac-               tured  by them as an intermediate product  for               further manufacture of leather cloth. As such,               it was contended that the product manufactured               by  the  appellants is not liable  to  central               excise duty. Shri Patel further stated that it               was  not  necessary to  prove  from  technical               angle  that the curde PVC sheets  manufactured               by  the appellants for  manufacturing  leather               cloth are different from PVC sheets which  are               manufactured by them and sold in the market as               such. Crude PVC sheets used in the appellants’               factory  for  further manufacture  of  leather               cloth  can  be distinguished from  PVC  sheets               which  are marketed by them as such  by  naked               eye.  Moreover,  all the processes  which  are               required  in  case  of PVC  sheets  which  are               marketed by the appellants so as to make these               sheets  marketable are not carried out in  the               case of crude PVC sheets which are used by the               appellants  in their factory for the  manufac-               ture of leather cloth ........" The Appellate Collector further held in the said order  that from  the  technical  point of view, crude  PVC  sheets  are different from marketable PVC sheets inasmuch as the tensile strength  of  crude PVC sheets is much lower  than  that  of marketable PVC sheets. He further held that:               "This is so because marketable PVC sheets  are               passed  through  the  calender  at  very  high               temperature and at a slow speed to that  gela-               tion/curing  fusion takes place while  in  the               case of crude PVC sheets, the same are  passed               through  the calender at very fast  speed  and               lower  temperature with the result that  gela-               tion  fusion  in  the course  of  heating  and               ageing  is not formed resulting in lower  ten-               sile strength. When these crude PVC sheets are               coated with textile               387               fabrics, the two layers are passed through the               rollers at slow speed and at high  temperature               and  it is only at this stage that the GEL  is               properly  formed  and resin  particles  become               swollen by diffusion of plasticizer into  them

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             that   they  touch  each  other.  As   heating               progresses,  the  swollen particles  begin  to               weld  together,  resulting  in  the   required               degree of strength."     Thereafter, the Classification List was filed in respect of crude PVC films manufactured for use in adhesive tapes on 9th  December,  1975 and the said list was approved  by  the Assistant  Collector of Central Excise after making  an  in- quiry  in  that behalf. On 15th February, 1977,  however,  a Show  Cause  Notice was issued by the  Assistant  Collector, calling upon the appellant to show cause as to why crude PVC films should not be classified under teriff Item 15A(2)  and appropriate duty not recovered under Rule 10 of the  Central Excise  Rules, as these then stood, read with Rule 173-J  of the Central Excise Rules. There was a corrigendum issued  on February  23, 1977 to the said Show Cause Notice dated  15th February, 1977 substituting the words ’Rule 10’ by the words ’Rule  10A’. A reply was given by the appellant to the  said Show  Cause Notice. In the said reply, the appellant  stated as follows:               "We have repeatedly pointed out that the issue               of "Crude Film" has been decided by the Appel-               late  Collector  and  also  by  the  Assistant               Collector   while  approving   classification.               However,   the  Superintendent  persisted   in               pressing  us  for  giving  information   about               production  figures of ’Crude  Film’  possibly               with a view to raise demand. We had  requested               the  Superintendent to let us know the  provi-               sion  under which he required us to  give  the               information  in regard to a product which  was               non-excisable. He was not able to clarify this               and  tried to invoke wrong sections and  rules               according  to  us. The present action  of  re-               classification,  in order to make the  product               excisable some how or other, seems to us to be               a continuation of the matter which the  Super-               intendent was not able to enforce on us. There               is no change in the market terminology of "PVC               Film". Our product is not known in the  market               as "PVC Film". Even technically also a further               process  is required to be carried out on  our               product before it is "PVC Film" as is known to               the  market. The various decisions of  Supreme               Court  on  this point are  well-known  to  the               Department. It is also known               388               that  the  Appellate Collector’s  decision  is               binding  on  you. The  principles  of  natural               justice  cannot  be served by serving  a  show               cause  notice  on us in order  to  change  the               Appellate Collector’s decision in some  manner               or  other. We have an uneasy feeling  that  an               attempt  is being made to some how  bring  the               product under excise duty." There  was  an order passed on 16th February,  1978  by  the Assistant  Collector  confirming the Show Cause  Notice.  On 10th October, 1979 an appeal was preferred by the  appellant against  the  order of the Assistant  Collector  dated  16th February, 1978 which was rejected by the Appellate Collector of Central Excise. On 6th February, 1980 a revision applica- tion was preferred, by the appellant to the Joint Secretary, Government  of India. That was transferred to  the  Tribunal and  by  the impugned order, the Tribunal has  rejected  the appeal under challenge.

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   The  Tribunal in the order has set out  the  contentions and observed that the question for determination was whether crude PVC film fell for classification under Item 15A(2)  of the Central Excise Tariff or not. A submission was made that the  Appellate Collector had held that the crude PVC  sheets were  not marketable and had not acquired the character  and status of PVC films as known to the market. It was contended on  behalf  of the appellant that only marketable  PVC  film would  fall  within the said item. On the  other  hand,  the Department’s  contention was that there was nothing to  show that the film/sheet was crude and the test of  marketability was  not relevant. According to the Tribunal, the crude  PVC films/sheets would fall under the Tariff Item. The  Tribunal was  of  the view that the tariff entry did  not  spell  out whether  it covered only finished film/sheet or  whether  it covered  also  crude film/sheet. The Tribunal  came  to  the conclusion  that  the  tariff  item  covered  all  types  of films/sheets. The Tribunal also came to the conclusion  that the concept of marketability was not relevant and all  sorts of crude films would be covered by the entry.     The Tribunal was of the view that the Appellate  Collec- tor’s observations were made entirely in different  context. In that view of the matter, the Appellate Collector’s  order was  confirmed  subject  to the modification  that  duty  in respect  of clearances prior to the issue of the Show  Cause Notice was restricted to the period permissible in terms  of Rule 10 read with Rule 173-J, that is to say, for 12 months. In other words, the Tribunal’s view was that if the descrip- tion of the 389 goods  in question fell into the entry, it was  dutiable  in the intermediate list and as such the goods had become goods as known to the market and the question of marketability  or being capable of being sold in the market was not relevant.     In  support of this appeal, on behalf of the  appellant, it  was contended by Shri Harish Salve that it was only  the ’goods  as specified in the Schedule’ to the Central  Excise that  could  be subject to the duty. It appears to  us  that under  the Central Excise Act, as it stood at  the  relevant time,  in  order to be goods as specified in the  entry  the first  condition was that as a result of  manufacture  goods must  come  into existence. For articles to be  goods  these must be known in the market as such or these must be capable of  being  sold in the market a goods. Actual  sale  in  the market is not necessary, user in the captive consumption  is not determinative but the articles must be capable of  being sold in the market or known in the market a goods. That  was necessary. This has been clearly spelt out by this Court  in Union of India v. Delhi Cloth & General Mills, [1963]  Supp. 1  SCR  586. There this Court held that  excise  duty  being leviable on the manufacture of goods and not on their  sale, the  manufacturer  could not be taxed  unless  manufacturing process  resulted  in production ’of goods as known  in  the market’ (empahsis supplied). In that case, the  respondents, who were manufacturers of vegetable products known as Vanas- pati,  were  assessed to excise duty under Item  23  of  the First Schedule to the Central Excises and Salt Act, 1944, on what  the taxing authorities called the manufacture  of  ’r- efined oil’ from raw oil which according to them fell within the description of "vegetable non-essential oils, all sorts, in or in relation to the manufacture of which any process is ordinarily  carried  on with the aid of power".  The  common case made by the respondents in their petition under Article 226 of the Constitution challenging the imposition was  that for  the purpose of manufacturing Vanaspati  they  purchased

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groundnut and til oil from the market and subjected them  to different processes before applying hydrogenation to produce Vanaspati  and that nothing that they produced at any  stage was  covered by that item. Affidavits by experts were  filed by  both the parties and the High Court found in  favour  of the  respondents  and allowed the petitions.  The  Union  of India appealed. It was urged on its behalf before this Court that  before  finally producing  Vanaspati  the  respondents produced at an intermediate stage what was known as ’refined oil’  in the market and although they might not sell it  and although Vanaspati, when produced, was liable to excise duty under  another item, that could not affect their  liability. It was held that excise duty being leviable on the 390 manufacture of goods and not on their sale, the  petitioners in  that case no doubt be liable if they  produced  ’refined oil’, as known in the market, at an intermediate stage.  But the  Court  found that it was clear that there could  be  no ’refined  oil’ as known in the market without  deodorisation according  to  the  specification of  the  Indian  Standards Institute and the affidavits of the experts. Since, however, the  process of deodorisation was admittedly applied in  the respondents’  factories  only after hydrogenation  was  com- plete,  they could not be said to produce ’refined  oil’  at any stage. Nor could the respondents be held to  manufacture some kind of ’non-essential vegetable oil’. K.C. Das  Gupta, J.,  who  spoke for the Court, at page 595  of  the  report, observed as follows:               "On a consideration of all these materials  we               have  no  doubt about the correctness  of  the               respondents’  case that the raw oil  purchased               by the respondents for the purpose of manufac-               ture of Vanaspati does not become at any stage               "refined oil" as is known to the consumers and               the commercial community."     After  considering the definition of the word  ’manufac- ture’ and several authorities and Words and Phrases,  Perma- nent Edition, Vol. 18, from a judgment of the New York Court and  also other relevant authorities, this Court  held  that the  definitions  made it clear that to  become  "goods"  an article  must be something which can ordinarily come to  the market  to be bought and sold. (Emphasis supplied). In  that view of the matter this Court agreed with the High Court and dismissed  the appeal. Therefore, the first  principle  that emerges  is that excise was a duty on goods as specified  in the Schedule. In order to be goods an article must be  some- thing which can ordinarily come to the market and is brought for sale and must be known to the market as such. Therefore, the  marketability in the sense that the goods are known  in the market or are capable of being sold and purchased in the market is essential. This principle was again reiterated  by this Court in South Bihar Sugar Mills Ltd., etc. v. Union of India  & Ors., [1968] 3 SCR 21, where this Court  held  that the  gas generated by the appellant companies in  that  case was kiln gas and not carbon dioxide as known to the  market, i.e., to those who deal in it or who use it. Therefore,  the kiln  gas  in question is neither carbon  dioxide  nor  com- pressed  carbon  dioxide  known as such  to  the  commercial community and could not attract duty under Item 14-H of  the First  Schedule.  It was held by this Court  that  the  duty being on the manufacture and not on the sale, the mere  fact that kiln gas generated by those concerns was not actually 391 sold did not make any difference if what they generated  and used  in  their manufacturing process  was  carbon  dioxide.

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Justice  Shelat  speaking for the Court at page  31  of  the report observed:               "The Act charges duty on manufacture of goods.               The  word "manufacture" implies a  change  but               every change in the raw material is not  manu-               facture.  There must be such a  transformation               that  a new and different article must  emerge               having  a distinctive name, character or  use.               The  duty is levied on goods. As the Act  does               not  define  goods, the  legislature  must  be               taken to have used that word in its  ordinary,               dictionary meaning. The dictionary meaning  is               that  to  become goods it  must  be  something               which can ordinarily come to the market to  be               bought  and sold and is known to  the  market.               (emphasis supplied). That it would be such  an               article  which  would  attract  the  Act   was               brought out in Union of India v. Delhi Cloth &               General Mills Ltd., [1963] Suppl 1 SCR 586." In that view of the matter, the Court came to the conclusion that  the gas generated by these concerns was kiln  gas  and not carbon dioxide as known to the trade, i.e., to those who deal  in it or who use it. It must be capable of being  sold in the market and known in the market as such. Then only  it would be dutiable.     This  view was reiterated again in Union  Carbide  India Ltd. v. Union of India, [1986] 2 SCC 547 where Pathak, J. as the  learned Chief Justice then was, speaking for the  Court observed  that in order to attract excise duty  the  article manufactured  must  be capable of sale to  a  consumer.  The expression  "goods manufactured or produced" must  refer  to goods which are capable of being sold to the consumer.  This Court observed as follows:               "It  does  not  seem to us that  in  order  to               attract  excise duty the article  manufactured               must  be capable of sale to a consumer.  Entry               84 of List I of Schedule VII to the  Constitu-               tion specifically speaks of "duties of  excise               on  tobacco  and other goods  manufactured  or               produced in India  ....  ", and it is now well               accepted that excise duty is an indirect  tax,               in  which  the  burden of  the  imposition  is               passed  on to the ultimate consumer.  In  that               context, the expression "goods manufactured or               produced"  must  refer to articles  which  are               capable of being sold to a consumer. In  Union               of India v.               392               Delhi  Cloth & General Mills, this Court  con-               sidered the meaning of the expression  "goods"               for  the purposes of the Central  Excises  and               Salt  Act, 1944 and observed that  "to  become               ’goods’ an article must be something which can               ordinarily come to the market to be bought and               sold",  a definition which was  reiterated  by               this Court in South Bihar Sugar Mills Ltd.  v.               Union of India."     It  is  necessary in this connection  to  reiterate  the basic fundamental principles of excise. The Judicial Commit- tee  of the Privy Council in Governor General in Council  v. Province  of Madras, [1945] F.C.R. 179, this Court  observed at page 1287 of the report that excise duty was primarily  a duty  on the production or manufacture of goods produced  or manufactured within the country. This Court again in Re  The Bill  to Amend S. 20 of the Sea Customs Act, 1878, And  Sec-

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tion  3 of the Central Excises and Salt Act, 1944, [1964]  3 SCR 787 at page 822 of the report referring to the aforesaid observations  of  the  Judicial  Committee  reiterated  that taxable  event in the case of duties of excise is the  manu- facture  of goods and the duty is not directly on the  goods but  on  the manufacture thereof. Therefore,  the  essential ingredient is that there should be manufacture of goods. The goods being articles which are known to those who are  deal- ing  in the market having their identity as such. Section  3 of the Act enjoins that there shall be levied and  collected in such manner as may be prescribed duties of excise on  all excisable goods other than salt which are produced or  ’man- ufactured’ in India. "Excisable goods" under section 2(d) of the Act means goods specified in the Schedule to the Central Tariff  Act, 1985 as being subject to a duty of  excise  and includes  salt. Therefore, it is necessary, in a  case  like this,  to find out whether there are goods, that is to  say, articles as known in the market as separate distinct identi- fiable commodities and whether the tariff duty levied  would be  as specified in the Schedule. Simply because  a  certain article  falls within the Schedule it would not be  dutiable under excise law if the said article is not "goods" known to the market. Marketability, therefore, is an essential ingre- dient in order to be dutiable under the Schedule to  Central Tariff Act, 1985.     It  appears from the facts as aforesaid before that  the crude  PVC films as produced by the appellant in  this  case were  not known in the market and could not be sold  in  the market and was not capable of being marketable. The  learned Solicitor General submitted before us that  the Tri- 393 bunal  was  right in considering that as  the  article  fell within  the Entry the marketability was irrelevant  and  the Tribunal  was right in not considering whether the  articles in question, namely, crude PVC films used in this case, were marketable or capable of being sold and used in the market.     Mr  Harish N. Salve on the other hand submitted that  as it  was  found  that the goods were not  marketable  by  the Appellate Collector in the order of 1974 and no evidence was adduced before the Tribunal to the contrary and the Tribunal refused to consider the question of marketability no  useful purpose  would  be  served in remanding the  matter  to  the Tribunal. The appeal should be allowed and no duty should be charged.     As  mentioned  before, the Appellate  Collector  has  on 14.1. 1974 held that the crude PVC sheets/films which formed the  subject-matter  of the appeal are manufactured  by  the appellant for the production of leather cloth in the factory are not marketable as PVC sheets and had allowed the  appeal because he found that:               "   ....   because PVC sheets  of  the  gauges               manufactured by the appellants are  invariably               either embossed or printed or both. The nature               of embossing may be with an engraving roll  or               with a mirror finished roller or a mat finish.               The  manufacture or PVC sheets  marketable  as               such  involves  the following  processing  se-               quences,  namely: Polyvinyl chloride resin  is               formulated  with plasticizer, colorants,  heat               stabilizers,  etc.  and  the  formulation   is               thoroughly  mixed. When homogeneous, this  mix               is  fed through a two roll mill to give  heavy               sheet  stock,  which  in turn is  fed  to  the               calender,  where it is reduced to the  desired

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             width, thickness etc. The temperature at which               PVC  sheets  which are marketed  as  such  are               passed  through the calender is about  178o  C               (330  - 350x) and the speed of the  roller  is               adjusted accordingly. The speed of the  roller               and  the temperature at which the  sheets  are               passed  through  the  calender  are  important               factors in order to achieve the minimum stand-               ard  of tensile strength of the sheets.  Gela-               tion,  i.e.,  the  change of  state  from  the               liquid  to  the solid  condition  that  occurs               during  the  heating and/or ageing,  when  the               plasticizer has been absorbed by the resin  to               an  extent  resulting in a dry  but  weak  and               crumbly  mass,  and thereafter  within  normal               proportions  of  resin and  plasticizer,  this               state is               394               attained when the resin particles have  become               so  swollen by diffusion of  plasticizer  into               them that they touch each other, is an  impor-               tant  process in the case of PVC sheets  which               are  marketed as such. As  heating  progresses               the swollen particles begin to weld  together,               resulting  in some degree of  strength.  After               the  GEL  is  formed in such  PVC  sheets  and               resins  get fused with plastisizer,  they  are               further subjected to the processing of finish-               ing,  embossing/printing. On the  other  hand,               crude  PVC sheets manufactured by  the  appel-               lants for production of leather cloth in their               factory  are passed through the rollers  at  a               temperature  of  130o - 1400 (280 F)  and  the               speed of the roller is, therefore, faster. Due               to  low  temperature and faster speed  of  the               rollers fusion is not completed in such  crude               plasticizers  thus  resulting in  the  tensile               strength  of  such crude PVC sheets  which  is               much less than the tensile strength of the PVC               sheets  which  are  marketable  as  such.  The               tensile  strength  of  PVC  sheets  which  are               marketed  as  such and the  crude  PVC  sheets               which  are  used by the  appellants  in  their               factory  for the manufacture of leather  cloth               are as under:                      (1) Marketable PVC sheets                         Thickness        Tensile    strength               Per cm. sq.                                       in  Kgs.  Longitudinal               Transverse                         0.08 mm             239          185                         O. 10 mm            230          201                         O.  15 mm            268           2               13                         0.20 mm             230          200                      (2) Crude PVC sheets                         Thickness         Tensile   strength               Per cm. sq.                                         kgs.    Longitudinal               Transverse                         O. 11 mm            127          98                         0.22 mm             144          107                          The  thickness of crude PVC  sheets               of O. 11 mm ultimately comes to 10 mm when  it               is  coated  with textile fabrics  and  rolled.

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             Similarly,  the thickness of crude PVC  sheets               of  0.22mm  ultimately  comes to  when  it  is               coated with fabrics and rolled.               395                         The idea behind producing crude  PVC               sheets at low temperature and at high speed of               the rollers is that when such crude PVC sheets               are  coated  with textile fabrics  and  passed               through a coating machine, high temperature is               required  to  be maintained and the  speed  at               which the rollers move has also got to be slow               so that these partially fused crude PVC sheets               are  eventually  fully fused at  the  time  of               coating these sheets with textile  substrates.               No finishing, embossing or printing is done in               case  of such crude PVC sheets. I,  therefore,               hold that the crude PVC sheets manufactured by               the  appellants are used by them in the  manu-               facture of leather cloth in their factory  are               not  marketable as PVC sheets and as such  the               same are not liable to duty under Item  15A(2)               of the said Schedule."     In  view  of  the  Appellate  Collector’s  order   dated 14.1.1974 it was the duty of the revenue to adduce  evidence or  proof that the articles in question were goods. No  evi- dence or proof was produced. The Tribunal went wrong in  not applying  the  proper  test. The test  of  marketability  or capable of being marketed was not applied by the Tribunal.     In that view of the matter that there being no  contrary evidence  found by the Tribunal in this case  subsequent  to the finding by the Appellate Tribunal, we are of the opinion that the appeal should be allowed and no excise duty  should be charged under section 15A(2) of the Central Excise Tariff on  the Crude PVC sheets. In the facts and circumstances  of the case, there will be no order as to costs. T.N.A.                                                Appeal allowed. 396