In the case of Vijayalakshmi Rice Mill v. Commercial Tax Officers, Palokal, (2006) 6 SCC 763, a distinction was sought to be drawn between ‘Cess’ and ‘Tax’ in the following terms:
“Hence ordinarily a cess is also a tax, but is a special kind of a tax. Generally tax raises revenue which can be used generally for any purpose by the State. For instance, the Income Tax or Excise or Sales Tax which generate revenue can be utilized by the Union or State Governments for any purpose, e.g. for payment of salary to the members of the armed forces or civil servants, police, etc. or for development programs, etc. However, cess is a tax which generates revenue which is utilized for a specific purpose. For instance, health cess raises revenue which is utilized for health purposes, e.g., building hospitals, giving medicines to the poor etc. Similarly education cess raises revenue which is used for building schools or other educational purposes. Gujarat Ambuja Exports Ltd. v. State of Uttarakhand, (2016) 1 UPLBEC 627.
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.