Test of marketability satisfies on being shown that product is capable of being sold and actual sale is irrelevant- SC

Brief of the case:

The Hon’ble Supreme Court in the case of M/s Escorts Ltd. held that the test of marketability fairly satisfies when it is shown that the product is commercially known and being capable of bought and sold. The same not being actually sold is totally irrelevant. Thus, the Transmission Assembly an intermediate product being capable of sold, though not sold by the assessee is chargeable to excise duty as the same is commercially known.

Facts of the case:

• The assessee company is engaged in manufacture of tractors an intermediate product ‘Transmission Assembly’ which comes into existence during the manufacture of tractors.
• The tractors during the period of dispute was exempted from the payment of excise duty, thus, department sought to levy excise duty on the intermediate product viz Transmission Assemblies by arguing that Transmission Assemblies of tractors was a commercially known product therefore, fall  into the category of excisable goods and liable to duty as the final product is exempt.
• The tribunal ruled the issue in the favour of department by holding that The mere fact that the transmission assembly  is meant only for the tractors manufactured by them will not mean that the impugned product is not capable of being brought to the market for being bought and sold because otherwise also its marketability get prove by the fact that the same being imported by the Farmtrac Division of the assessee company.
• The assessee is in appeal against the order of tribunal before Hon’ble Supreme Court.

Contention of Assessee:

• Transmission Assembly was specifically designed for the tractor manufactured by assessee and was not foe commercial sale the market. Also, not a single instance of sale in the market had ever taken place.
• Further, the duty demand was absurd in that the Transmission Assembly of ia company named TAFE which is said to be the same as that of the assessee co. was only Rs. 13,000 /- per piece as against the highly inflated figure of Rs.53,790/-.

Contention of the Revenue:

• The revenue had discharged its burden by oral and documentary evidence which show that many companies in India are manufacturing the Transmission Assemblies and also supplying the same.
• Thus, the transmission assembly is a marketable product as the same is commercially known.
• It is completely irrelevant that the transmission assembly manufactured by the assessee company is unique in itself that it cannot be used in tractors other than manufactured by the assessee company. Further it is also irrelevant that assessee has not sold the same any single unit of such Transmission Assembly.
• Because the test of marketability get satisfy by showing that the said goods are capable of being sold.
  

Decision of the Hon’ble Supreme Court:

• One of the test to check whether the process resulting into manufacture is that the product resulting from the process should be marketable and commercially known. The moment a product is commercially known to the   persons in the market who buy and sell, the test is satisfied. The fact that the product is generally not bought or sold or has no demand in the market is irrelevant.
• Thus, the contention of the assessee that Transmission Assemblies were not available in the market for being bought and sold, they were not excisable goods not being marketable cannot be accepted. In result the appeal of assessee is dismissed.