REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  5829 OF 2002

M/S. NICHOLAS PIRAMAL INDIA LTD.     ….Appellant

Versus

COMMNR. OF CENTRAL EXCISE, MUMBAI        ...Respondent

JUDGMENT

Dr. MUKUNDAKAM SHARMA, J.

1. The short question which arises for determination in this  

Civil Appeal filed by the Assessee under Section 35L(b) of  

the Central Excise Act, 1944 is whether “Vitamin A Acetate  

Crude” and “Vitamin A Palmitate” (hereinafter referred to as  

the product in question) or “Crude Vitamin A” is excisable  

to duty.

2. The present appeal filed by the appellant – assessee  herein  

under  Section  35L(b)  of  the  Central  Excise  Act,  1944  

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(hereinafter referred to as ‘the Act’) arises out of an order  

dated  16.05.2002  passed  by  the  Customs,  Excise  Gold  

Control Appellate Tribunal, West Zonal Bench at Mumbai  

(hereinafter  referred  to  as  ‘the  CEGAT’)  in  appeal  No.  

E/2404/96-Bom  holding  that  “crude  vitamin  A”  is  

marketable and hence liable to duty.

3. The appellant – assessee is engaged in the manufacture of  

Vitamin  A  in  a  finished  and marketable  form.  These  are  

cleared  on  payment  of  applicable  excise  duties  under  

Heading 29.36 of the Schedule to the Central Excise Tariff  

Act,  1985.    The  assessee  is  also  engaged  in  the  

manufacture  of  animal  feed supplements  with  the  brand  

name  ‘Rovimix’  (now  called  ‘Endomie’)  and  ‘Rovibe’  (now  

called ‘Endobee’).   

4. During the intermediate stage of manufacture of vitamin A,  

“Vitamin  A  Acetate  Crude”  and  “Vitamin  A  Palmitate”  or  

Vitamin A in its crude form emerges.  The crude Vitamin A  

acetate  is  subjected  to  further  process  of  crystallization  

using Methanol and the crystals centrifuged and dried to  

obtain  finished  Vitamin  A,  which  is  marketed  by  the  

appellant.   

5. Five  show  cause  notices  were  issued  to  the  appellant  

demanding  excise  duty  on  the  product  in  question  

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consumed by the appellant in the manufacture of animal  

feed supplements.  Adjudicating upon these five show cause  

notices  issued  to  the  appellant,  the  Commissioner  

confirmed the liability to duty for the goods manufactured  

and cleared between December  1989 and February  1995  

and  imposed  a  penalty  on  the  appellant.  The  relevant  

portion of  the finding of  the Commissioner  is  reproduced  

herein :

“SOURCE:  MARTINDALE  –  THE  EXTRA  PHARMACOPOEIA

From the  above  it  can  be  seen that  this  is  a  commercially  known  and  marketable  product.   Merely  because  it  is  unstable  at  room  temperature  does  not  exclude  it  from  commercial marketability.

Intermediate goods of distinctly and differently  known  in  the  commercial  sense  of  the  word   constitute  manufacture  under  Section  3  of  Central  Excises  &  Salt  Act,  1944.  Vitamin  A  acetate  crude  and  Vitamin  A  Palmitate  are  different commercial  item from that of Rovimix  and  Rovibe.  It  is  also  known  in  different  pharmacopoeia  as  such.  Merely  because  the   company  has  not  sold  the  product  does  not  exclude  it  from  the  purview  of  commercial   marketability.  It  has  to  be kept in an  oxygen  free environment to prevent oxidizing by other   agents  which  similarly  is  the  case  in  many  drugs and chemical compositions. The fact that   it  has  no  standard  specification  and  potency  does  not  exclude  it  from  distinct  commercial   

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entity as it still remains Vitamin A acetate and   Vitamine A Palmitate.

Apart  from  the  aforesaid  the  Tariff  head  2936.00  of  Central  Excise  Tariff  Act,  1985  covers  “Provitamins  and  Vitamins,  natural  or  reproduced  by  synthesis  (including  natural   concentrates),  derivatives  thereof  used  primarily as Vitamins and intermixtures of the   foregoing  whether  or  not  in  any  solvent  and  Vitamin  A  acetate  and  Vitamin  A  Palmitate   clearly falls within the parameter of this Tariff   head.  This  clearly  indicates  that  there  are   commercially marketable entities and supports   the  earlier  arguments  of  distinct  commercial   entity”

6. The Tribunal  considered the  entire  facts  and the records  

and  on  appreciation  thereof,  upheld  the  finding  of  the  

Commissioner. The Tribunal also considered the fact that  

nobody would manufacture a pharmaceutical of such purity  

unless  the  manufacturer  was interested  in  its  sale.   The  

Tribunal  however  remanded  the  matter  back  to  the  

adjudicating authorities for the purposes of determining the  

valuation of the products in question.  

7. So far the other issue with regard to demands being barred  

by  limitation  was  concerned,  the  Tribunal  held  that  the  

show cause  notice  dated 29.12.1994 would be barred by  

limitation  for  the  period  from  February  1993  to  October  

1993 but so far other three notices relating to the period  

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November 1994 to April 1994, May 1994 to October 1994  

and November 1994 to February 1995 were concerned, they  

were held to be within limitation.   The aforesaid findings  

and  conclusions  arrived  at  by  the  Tribunal  are  under  

challenge  in  this  appeal  on  which  we  heard  the  learned  

counsel appearing for the parties.   

8. The  Counsel  appearing  for  the  appellant  submitted  that  

crude vitamin A, on which duty is being demanded by the  

Revenue  is  an  intermediary  and  that  such  demand  is  

untenable  and  unjustified  inasmuch as  the  said  product  

cannot  be  termed  as  “goods”  and  is  incapable  of  being  

marketed, particularly in view of the fact that the life of the  

item would not be more than two days.  He also submitted  

that the burden to prove the “marketability”  of a product  

would  always  rest  on  the  respondent  and  that  the  

department  has failed to lead any evidence  indicating its  

capability of being marketed, particularly owing to the fact  

that  it  is  unstable  if  it  is  not  stored  in  sub-zero  degree  

centigrade.  He also submitted that the anti-oxidants which  

are needed to give stability to the product are not added to  

the  crude  vitamin  A  separately  but  are  added  to  crude  

vitamin A simultaneously along with other ingredients in a  

single  operation  to  obtain  the  final  product,  namely  the  

animal feed supplement and therefore demand raised by the  

Revenue  is  unwarranted.  In  support  of  his  submissions,  

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reliance was placed on Union of India v.  Delhi Cloth and  General  Mills  Co.  Ltd reported  in  (1997)  5  SCC  767;  Nirlon Synthetic Fibres and Chemicals Ltd v.  Collector  of C. Excise  reported in  1996 (86) ELT 457;  Hindustan  Zinc Ltd v. CCE, Jaipur reported in 2005 (181) ELT 170;  CCE, Baroda v.  United Phosphorus Ltd reported in  2000  (117) ELT 529;  Cipla Ltd v.  CCE, Bangalore reported in  2008 (225) ELT 403.  

9. The aforesaid contentions of the counsel appearing for the  

appellant were, however, refuted by the counsel appearing  

for the respondent contending, inter alia, that the products  

in question admittedly retain its properties for a period of 1-

2 days and therefore it is a marketable product.  He also  

submitted marketability of the said product is a finding of  

fact, having been so decided by the Tribunal as also by the  

Commissioner and therefore, such a finding of fact should  

not be disturbed unless the same is perverse.  Reliance was  

placed on  T.N. State Transport Corporation Ltd v.  CCE,  Madurai reported  in  2004  (116)  ELT  433;  A.P.  State  Electricity  Board v.  CCE,  Hyderabad reported  in  1994  (70) ELT 3.  

10.The  taxable  event  for  the  levy  of  excise  duty  is  the  

manufacture of goods. The term “manufacture” is of wide  

import  and  may  include  various  activities  and  processes  

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which may not be termed as ‘manufacture’ in the common  

parlance.  But manufacture of goods alone is not enough. In  

order to attract the levy of excise duty, the goods should not  

only be manufactured,  i.e.,  come into existence,  but  also  

should be articles or products that are known to the market  

and  must  be  capable  of  being  brought  and  sold.  Some  

emphasis has to be laid on the use of the word capable as  

actual  sale  of  the  product  or  article  is  not  essential  and  

required. This has been settled in a number of authorities of  

this Court and no longer  res integra. There cannot be any  

doubt  that  intermediate  products,  even  if  captively  

consumed and not actually sold,  may be liable to levy of  

excise duty if they satisfy the test of both manufacture and  

marketability.  The  aforesaid  legal  principle  has  been laid  

down by this Court in the judgments in  Hindustan Zinc  Ltd.  v. Commissioner of Central Excise, Jaipur, reported  in  2005 (181) E.L.T. 170 (S.C.),  Union of India  v.  Delhi  Cloth  & General  Mills  Co.  Ltd.,  reported  in  1997 (92)  E.L.T.  315  (S.C.),  Cadila  Laboratories  Pvt.  Ltd.  v.  Commissioner,  reported in  2003 (152) E.L.T. 262 (S.C.).  In the decision in Hindustan Zinc Ltd. (supra), decided by  three Judge Bench of this Court, it was also held by this  

Court  that  marketability  of  a  product  is  essentially  a  

question of fact.

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11.Therefore, the question of marketability, being a question of  

fact,  has to be determined in the facts of  each case and  

cannot  be  strait-jacketed  into  pigeon  holes.  The  orders  

passed by the  Commissioner  as also the  Tribunal  clearly  

demonstrate that the product in question is commercially  

known and is capable of being marketed. The facts that the  

appellants have chosen not to sell the product in question  

does  not  mean  that  the  same  is  not  capable  of  being  

marketed.  The matter  can be looked from another  angle.  

There is also no dispute that the said product in question is  

used  in  the  manufacture  of  the  animal  feed  supplement  

sold  by  the  Appellant.  Had  the  Appellant  not  used  the  

product in question, they would have had to buy the same  

from the market to manufacture and sell the Animal Feed  

Supplement. This clearly shows that a marketable product  

emerges.  

12.Furthermore, in dealing with a question of fact, this Court  

should be reluctant in interfering with concurrent findings  

of fact on the issue of marketability unless it is shown that  

the said finding is perverse or patently illegal.  

13.One  of  the  arguments  placed  by  the  Counsel  for  the  

Appellant  is  that  the  product  in  question  does  not  have  

shelf-life  and hence  cannot  be  said  to  satisfy  the  test  of  

marketability.  The  said  argument  is  contradicted  by  the  

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evidence adduced by the Appellant themselves. It has been  

brought  on record by the  Appellants  themselves  that  the  

product  has  a  shelf-life  of  2  to  3  days.  Short  shelf-life  

cannot  be  equated with no shelf-life  and would  not  ipso  

facto mean that it cannot be marketed. A shelf-life of 2 to 3  

days  is  sufficiently  long  enough  for  a  product  to  be  

commercially marketed. Shelf-life of a product would not be  

a  relevant  factor  to  test  the  marketability  of  a  product  

unless it is shown that the product has absolutely no shelf-

life  or  the  shelf-life  of  the  product  is  such that  it  is  not  

capable of being brought or sold during that shelf-life. This  

Court  in  T.N.  State  Transport  Corporation  Limited  (supra) has  held  that  a  shelf-life  of  8  to  10  hours  was  enough to market the product in issue before the Court in  

that case.

14.It  was  further  urged  by  the  counsel  appearing  for  the  

appellant  that  the  aforesaid  show  cause  notices  for  the  

remaining  three  periods  were  also  barred  by  limitation.  

However,  the  Tribunal  found  that  while  the  show  cause  

notice for the period from February 1993 to October 1993  

dated 29.12.1994 was barred by limitation, but in so far as  

other three notices relating to the period November 1994 to  

April 1994, May 1994 to October 1994 and November 1994  

to  February  1995  were  concerned,  they  were  held  to  be  

within limitation. It is also disclosed from the records that  

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the  appellant  did  not  disclose  to  the  revenue  that  the  

assessee  was  manufacturing  the  aforesaid  product.  

Assessee  also  did  not  maintain  an  account  and  paid  no  

duty on this. Therefore, the Commissioner, Central Excise  

as  also  the  Tribunal  were  justified  in  holding  that  the  

extended period of limitation under proviso to Section 11A  

(1)  of  the  Central  Excises  &  Salt  Act,  1944  could  be  

invokable.  We  find  no  reason  to  interfere  with  the  said  

finding. In that view of the matter, demand made for the  

aforesaid three periods cannot be said to be time-barred.  

15.In coming to the aforesaid conclusion, both on merit and  

also on limitation, we are supported by the Division Bench  

decision of this Court in T.N. State Transport Corpn. Ltd.  v.  Collector of Central Excise, Madurai reported in 2004  (166) E.L.T. 433 (S.C.).  The facts of the said decision are  almost similar to the facts of the present case and almost  

identical issues which are raised in the present appeal were  

also raised by the assessee in the said case.  We, therefore,  

draw our support from the ratio of the aforesaid decision in  

arriving at the conclusion in the present case.

16.We,  therefore,  find  no  infirmity  in  the  findings  of  facts  

arrived at by the Commissioner of Central Excise, Mumbai-

III as also the Tribunal. The appeal stands dismissed but we  

leave the parties to bear their own costs.

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........................................J        [Dr. Mukundakam Sharma]

........................................J  [Anil R. Dave]

New Delhi, November 29, 2010.

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