Marketability is essential for excisability of captive paste used in match box manufacture; non-marketable goods escape duty.

Captive consumption of paste used in making match boxes did not make it excisable because excisability depends on marketability as well as manufacture. The paste was prepared daily, used almost immediately, had a very short shelf-life, and there was no positive evidence that it could be preserved or bought and sold in the market. Where non-marketability is shown, the burden shifts to the Revenue to rebut it with evidence, and trade notices on short-lived adhesive preparations supported that position. On those facts, the paste was treated as non-marketable goods, so the duty demand and penalties could not be sustained.

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Issues: Whether the paste manufactured by the assessee and consumed captively in the course of making match boxes was marketable and therefore excisable.

Analysis: Excisability depends not merely on manufacture but on the goods being marketable, that is, capable of being bought and sold. The evidence showed that the paste was prepared daily, used almost immediately, and had only a very short shelf-life, with no material to show that it could be preserved or marketed. The burden to rebut the plea of non-marketability lay on the Revenue, and no positive evidence was produced to establish marketability. The trade notices relied upon also supported the view that pastes and similar adhesive preparations with short shelf-life and captive use were not treated as marketable goods.

Conclusion: The paste was not excisable, and the duty demand and penalties could not be sustained.

Ratio Decidendi: Goods are dutiable as excisable goods only if, besides being manufactured, they are marketable or capable of being marketed, and where non-marketability is shown, the Revenue must rebut it with positive evidence.

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