E- hawking can also constitute marketability

EXPERT EYE

E-hawking (electronic hawking) of goods in these days of computer technology can constitute an electronically operated market which also constitutes an element of marketability so necessary to prove manufacture of goods.

This has been stressed in one of the latest judgments of a larger Bench of the tribunal in the case of Mahindra & Mahindra Ltd versus Commissioner of Central Excise, Aurangabad, 2005 (190) ELT 301 (Tri.-LB).

The issue before the tribunal was, inter alia, about the marketability of steel structures, which are not normally sold from the factory or godown but are often fabricated on the spot where the final structure gets fitted on the earth.

The Supreme Court observed that the parts of the steel structures could not be viewed through a hawker's eye. Hawking, in its traditional sense, refers to the movement of the goods carried by hawker screaming for the attention of potential customers. This cannot apply to the marketability of such structures or parts of structures.

Hawking can here include e-hawking to accommodate heavy structures. The concept of marketability, therefore, has to be expanded for such electronic development to hawk products, which cannot be bought and sold in the normal course of business.

This is, however, not to deny that such heavy structures can also be sold by advertisement in the normal course, through printed media. The expansion of the concept of marketability is only to emphasise that only the traditional market is not enough to prove marketability.

There have been many judicial decisions on the issue of transmogrification of the concept of marketability over a period of time and there is no end to it, so to say.

This is due to the technological metamorphosis taking place continuously in manufacture and, therefore, in the concept of marketability.

The traditional or the classical concept was that marketability means saleable. The test of classification is, how the goods are known in the market.

These tests have been laid down by the court in a number of judgments, including Union of India versus Delhi Cloth & General Mills Co Ltd (1997 (92) ELT 315); Cadila Laboratories Pvt Ltd versus Commissioner of Central Excise, Vadodara (2003 (152) ELT 262).

Along side came the concept that marketability is even superior to the entry in the tariff. The Supreme Court held in several judgments""notably in Moti Laminates versus CCE, 1995 (76) ELT 241 (SC) and in CCE versus Markfed Vanaspati, 2003(153) ELT 491 (SC)""that even if there was a tariff entry specifically, the revenue department had to prove marketability of the product in order to charge excise duty on it.

The shelf life of products sufficient to be bought and sold in the market is also a necessary constituent of marketability, held the Supreme Court in the cases of Commissioner versus Tisco, 2005 (184) ELT A36 (SC) and Bhor Industries versus Collector, 1989 (40) ELT 280 (SC).

Enhancing marketability of an already existing marketable product has also been held by the Supreme Court to be an element of manufacture. The sterilisation process of syringes and needles enhanced the marketability of syringes by changing the nature and understanding of commercial identity and, hence, it is a further manufacture on already manufactured goods.

Fresh duty has to be paid, however, allowing Modvat credit. This was held by the Supreme Court in the case of Servo-Med Ind Pvt Ltd. versus Commissioner, 2005 (182) ELT A41 (SC)

Even software""which was for long being considered as intangible and, therefore, not goods""has now been held to be excisable, regardless of whether it is tangible or intangible, as long as it is marketable if it is in a canned form, held the Supreme Court in the case of TCS versus the State of Andhra Pradesh, 2004 (178) ELT 22(SC).

These are the mutations in the concept of manufacture and marketability ending now in the inclusion of e-hawking as a relevant ingredient. So, now we can say: "The website is also a market".

(The author is a former member of the Central Board of Excise&Customs)

smukher2000@yahoo.com