The word “goods” has not been defined under the Central Excise Act. Article 366(12) of the Constitution defines ‘goods’ as ‘goods that include all materials, commodities and articles’.
Sale of Goods Act defines that “Goods” is every kind of movable property other than actionable claims and money; and includes stocks and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale.
The word “goods”, for purpose of levy of Excise duty, must satisfy two requirements
i.e. (a) they must be movable and (b) they must be marketable.
Goods must be movable - They must be movable. Thus, immovable property or property attached to earth is not ‘goods’ and hence duty cannot be levied on it.
Goods must be Marketable - The item must be such that it is capable of being bought or sold. This is the test of ‘Marketability’. The goods must be known in the market. Unless this test of marketability is satisfied, duty cannot be levied as these will not be goods. It was held that to become ‘goods’ an article must be something which can ordinarily come to market to be bought and sold.
Actual sale is not necessary - Marketability is an essential ingredient in order to be dutiable. Marketability is a decisive test for dutiability. It only means ‘saleable’ or ‘suitable for sale’. It need not in fact be marketed. The article should be capable of being sold to consumers, as it is - without anything more. -
Mere mention in Tariff is not enough - Mere mention of an item in tariff is not enough. Simply because a certain article falls within the schedule (of Central Excise Tariff), it would not be dutiable if the article is not ‘goods’ known to the market.
Duty leviable on captive consumption - Since excise is a duty on manufacture, duty is leviable even if goods are consumed within the factory and not sold. However, the goods must be marketable in the condition in which they are manufactured and further consumed within the factory.
Everything that is sold is not 'marketable' - 'Marketability' implies regular market for a product.
Occasional, stray or distress sales do not mean that the product is 'marketable'.
Marketability to be decided on the basis of the state in which it is produced - The commodity which is sought to be made liable to excise duty must be a commodity that is marketable as it is, and not a commodity that may, by further processing, be made marketable
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