The principle of law, thus is crystal clear. It is to be seen as to whether as to what point of time sale is effected, namely, whether it is on factory gate or at a later point of time, i.e., when the delivery of the goods is effected to the buyer at his premises. This aspect is to be seen in the light of the provisions of the Sale of Goods Act by applying the same to the facts of each case to determine as to when the ownership in the goods is transferred from the seller to the buyer. The charges which are to be added have put up to the stage of transfer of that ownership inasmuch as once the ownership in goods stands trabsferred to the buyer, any expenditure incurred thereafter has to be on buyer’s account and cannot be a component which would be included while ascertaining the valuation of the goods manufactured by the buyer. Commissioner, Customs and Central Excise v. Roofit Industries Ltd., (2015) 8 SCC 229.
Tag Archives: Production
In common parlance, the two words “type” and “form” are not of the same import. According to the Oxford Dictionary, whereas the meaning of the expression “types” is “kind, class, breed, group, family, genus”; the meaning of the word, “form”, is “visible shape or configuration of something”, or the “style, design and arrangement in an artistic work as different from its content”. Similarly, Macmillan Dictionary defines “type” as “a group of people or things with similar qualities or features that make them different from other groups” and “form” as “the particular way in which something appears or exists or a shape of someone or something”. Therefore, “types” are based on the broad nature of the item intended to be classified and in terms of “forms”, the distinguishable feature is the particular way in which the items exist. An example could be the item “wax”. The types of wax would include animal, vegetable, petroleum, mineral or synthetic wax whereas the form of wax could be candles, lubricant wax, sealing wax etx. State of Jharkand v. LA OPALA RG Ltd., (2014) 15 SCC 136.
The Hon’ble Supreme Court in Board of Trustees v. CCE, (2007) 216 ELT 513, noted that in order to constitute “goods”, twin tests have to be satisfied, namely, the process constituting manufacture and, secondly, marketability. It was further observed that if the “goods” are not capable of being sold, then the test of marketability is not fulfilled. The burden is on the department to prove whether there exists the process which constitutes manufacture, and, secondly, whether the product is marketable.
In Bata India Ltd. v. CCE, (2010) 5 SCC 490, the Hon’ble Apex Court was considering the question as to whether unvulcanised sandwiched fabric assembly produced in the assessee’s factory and captively consumed by it could be termed as “goods”. It was observed in the facts of the case that the product in question was used as an intermediate product and went into the making of a component for the final product. But, the burden to show that the product in question was marketed or was capable of being bought or sold in the market so as to attract Central Excise Duty was entirely on the Revenue.
It is therefore clear that before a product can be classified as “goods”, it must be shown to be a complete product, having a commercial identity and capable of being sold to a consumer. All this has to be established by the Revenue. Siddharth Optical Disc Private Limited v. Union of India, 7 ITCC 210.