2002 INSC 0223 SUPREME COURT OF INDIA The Commissioner of Central Excise, Chandigarh-II Vs. M/s. Jagatjit Industries Ltd. C.A.No.7769 of 2001 (M.B. Shah and B.N. Agarwal JJ.) 15.03.2002 JUDGMENT M.B. Shah, J. ­ 1. The Commissioner of Central Excise, Chandigarh has challenged the order dated 8th May 2000 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi(for short referred to as "CEGAT") in Appeal No. E/3084/99-D etc. by which the Tribunal dismissed the appeals preferred by the revenue involving the common question - whether the respondents were engaged in the manufacturing propagation of yeast leviable to central excise duty. Hence, these appeals. 2. Therefore, the short question involved in these appeals is - whether the `yeast' propagated by the respondents having self-lie of 6-8 hours which can be preserved in containers was excisable to the cutoms duty under description of heading 21.02 of the Central Excise Tarrif Act. The Tarrif Heading 21.02 read reads thus:- Heading No. Yeats (active or - Put up inactive); other single- in unit Sub Heading cell micro-organisms,, containers No.Description 21.02 dead (but not including 2102.10 and 10% 2102.90 Other 10% of Goods vaccines of Chapter 30); ordinarily prepared baking intdnded powders for sale 3. Learned cousel for the appellant submittd that order passed by the CEGAT is on the face of it illegal in view of the aforesaid Item No. 21.02 whcih makes yeast as excisable. He submits that the CEGAT has arrived at the conclusion that its life is for 6-8 hours and there is no reason to hold that it is not marketed or marketable. 1 SpotLaw 4. As asainst this, learned counsel appeariong on behalf of the respondents submitted that the contention raised by the counsel for the appellant is totally beside the point as it was never contended by the respondents before the CEGAT that yeast isnot excisable. What was contended before the CEGAT was that respondents were not manufacturing yeast. On the contrary, they were purchasing yeast from the market and propagating the same for manufacture of potable liquor.. 5. In our view, it would be misreading the order passed by the CEGAT to hold that it has arrived at the conclusion that yeast is not excisable. The CEGAT has held that the process adopted by the respondents of purchasing the yeast from the market which is excisable and mixing it with molasses and water for propagating the same cannot be held to be manufacture of yeast, as such liquid in mixture from is not marketable. In the present case, in the show cause notice issusedby the Assistant Commissioner the process adopted by the respondents is mentioned which makes the positon year. It is stated in theshow cause notice that party is engaged in manufature/propagation of yeat for captive consumption in manufacture of potable Ethyl Alcohol. For that purpose, two processes are adopted by the party. Firstly, respondents purchase fresh yeast of 500 grams packets from the agents of yest manufacturing Company. They mix 10 kilograms of fresh yeast with molasses purchased from the market which is diluted in water in a tank capacity of 10,000 litres, where it is propagated for 13 hours. The said mixture is called `BUB is defined in the Punjab Distillery Rules, 1932. The said BUB is shifted to fermention vessel. After fermentation, it is called `WASH' as defined in the Distillery Rules. Similarly, the party also prchases yeast culture procured from the National Chemical Laboratory, Pune. first molasses are taken in a small flask of 50 ml. and a pinch of yeast from slant or brought out yeast is added with the help of Plantinum wire. The mixture so obtained is kept in a particular temparature in BOD incubator for about 21 hours. Thereafter, the said mixture is later transferred into another flask of 250 ml. wherein molasses and water is already stored. The process continues and thereafter the mixture if finally kept in a vessel having capacity of 10000 litres. It is also known as `BUB' vat placed inthe fermentation Hall. The mixture is permitted to ferment. This fermented mixture is used for manufacture of potable alcohol and, therefore, this intermediate product of molasses and yeast is excisable. 6. On the basis fo the show cause notice, the Assistant Commissioner after hearing the parties arrived at the conclusion that the manufacturing process of `WASH' as given in the show cause notice would be covered within the category of active yeast as it is produced from culture yeast or seed yeast purchased from laboratory or market. The product `WASH' would be covered within the category of Baker's yeast. That order was set aside by the Commissioner (Apapeals) by holding that the goods in question were having a very short self-life; there was no evidence to prove that such goods were either marketed or were marketable. That finding is upheld by the CEGAT. 7. As stated above, in the appeals before the CEGAT, there was no dispute that `yeast' itself is exigible to duty, but what was contended before the Tribunal was limited to the so-called product of yeast obtained by propagating the same by mixing it with molasses and water for manufacture of potble alcohol. Hence, in our view, the finding even by the CEGAT cannot 2 SpotLaw be held to be, in any way, illegal or erroneous because it has not been prove that such intermediate product is marketed or marketable. Tor this purpose the CEGAT has rightly relied upon the decision of this Court in Union of India v. Delhi Cloth and General Mills Co. Ltd.1. The CEGAT has also relied upon the decison in Collector of Central Excise, Baroda v. M/s Ambalal Sarabhai Enterprises (P) Ltd.2, for holding that in such cases the burden is on the Department to prove that such goods were either marketed or were marketable. Further, this Court in Collector of Central Excise, Baroda v. United Phosphorus Ltd.3, observed taht though the intermediate goods so coming into existence may be specified in the Schedule as excisable, they would not be subjected to duty unless they satisfy the test of marketability. Hence, there is no substance in these appels and are dismissed, with no order as to costs. 11997(5) SCC 767 21989(4) SCC 112 32000(4) SCC 18 3 SpotLaw