Page 25 - DCOM308_DCOM502_INDIRECT_TAX_LAWS

Indirect Tax Laws

Notes 2.1.1 Factory

Factory means any premises where any part of the excisable goods other than salt are manufactured
or any manufacturing process is carried out.

2.1.2 Goods

Goods have not been defined in Central Excise Act. As per Article 366(12) of Constitution of
India, Goods includes all material commodities and articles.
Sale of Goods Act defines that "Goods" means 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.

Goods must be: (i) Movable; and (ii) Marketable
Movable means goods, which can be shifted from one place to another place, e.g., motor car,
mobile phone, computer etc.

The goods attached to earth are immovable goods, such as, Dams, Roads, and Buildings etc.
Movable Goods are manufactured or produced but immovable goods are constructed.
Goods produced for free distribution, as sample, gifts, or replacement during warranty period
is also liable of excise duty.

Excisable Goods are those goods, which are mentioned in the items of tariff defines "Excisable
Goods as goods specified in the schedule of CETA 1985 as being subject to a duty of excise and
includes salt."

!
Caution The word ‘Manufacture’ as specified in various Court decisions shall be called
only when a new and identifiable goods emerge having a different name, character, or
use.

2.1.3 Manufacture or Production

According to Section 2(f) of Central Excise Act "manufacture" includes any process:

(i) Incidental or ancillary to the completion of manufactured product or
(ii) Which is specified in relation to any goods in the Section or Chapter notes of the Schedule
to the Central Excise Tariff Act, 1985 as amounting to manufacture, or
(iii) Which, in relation to goods specified in third schedule to the CEA, involves packing or
repacking of such goods in a unit container or labelling or relabelling of containers or
declaration or alteration of retail sale price or any other treatment to render the product
marketable to consumer?
Clauses (ii) and (iii) are called deemed manufacture. Thus, definition of 'manufacture' is inclusive
and not exhaustive.
The word ‘Manufacture’ as specified in various Court decisions shall be called only when a new
and identifiable goods emerge having a different name, character, or use; e.g., manufacture has
taken place when table is made from wood or of pulp is converted into base paper, or sugar is
made from sugarcane.

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