Marketability of intermediate product and exemption claim required fresh adjudication after the appellate authority failed to decide both issues.

Marketability of the intermediate black wet lump had to be determined first because that issue went to the root of duty liability, but the appellate authority had not addressed it. The assessee's claim to exemption under Notification No. 217/86 also remained unexamined, and a finding was required on that aspect after giving a hearing. The appellate order was therefore set aside and the matter remanded to the Commissioner for fresh decision after affording a reasonable opportunity of hearing.

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Issues: (i) Whether the intermediate black wet lump emerging in the course of manufacture was marketable so as to attract duty; (ii) whether the claim to exemption under Notification No. 217/86 could be examined in the proceedings.

Analysis: The departmental appellate authority had not addressed the question of marketability, though that issue went to the root of duty liability. The record also showed that the exemption claim under Notification No. 217/86 had not been considered, and the matter required a finding on that aspect after hearing the assessee.

Outcome: The appellate order was set aside and the matter was remanded to the Commissioner for a fresh decision after affording a reasonable opportunity of hearing.

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