Marketability test for excise duty: an intermediate rubberised fabric was treated as excisable despite captive consumption.

Marketability, not actual sale, is the decisive test for excise duty on an intermediate product. The note discusses unvulcanised sandwiched fabric assembly used for footwear uppers and explains that, because it was a distinct commodity capable of storage, transport and use within its shelf life, it was treated as marketable and therefore excisable under Chapter 59. It also notes that captive consumption does not exclude duty where vendibility and commercial utility are established, that short shelf life alone does not negate marketability, and that the burden to disprove marketability lies on the Revenue.

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Issues: Whether the unvulcanised sandwiched fabric assembly / double textured rubberised fabric manufactured by the assessee was marketable and therefore excisable under Chapter 59, so as to attract central excise duty.

Analysis: The product emerged from a process of mixing rubber, chemicals and solvents and spreading the mixture between two textile layers, resulting in a distinct intermediate commodity used for footwear uppers. The majority held that the decisive test was marketability, not actual sale, and that the material was capable of being stored, transported and sent out for stitching within its usable life. The earlier Calcutta High Court decision in the assessee's own matter was treated as supportive of vendibility, and the burden to disprove marketability was held to lie on the Revenue. The majority further held that short shelf life did not by itself negate marketability and that the evidence led by the assessee was not rebutted by the Department.

Conclusion: The product was held to be marketable and excisable, and the demand on merits was upheld against the assessee.

Concurring Opinion: The third Member agreed that the product was marketable and liable to excise duty, treating the Calcutta High Court decision in the assessee's own case as governing and holding that the assessee's product was a distinct, vendible intermediate commodity.

Dissenting Opinion: The Judicial Member held that the Revenue had failed to establish marketability and that the product, being unvulcanised and of short shelf life, was not excisable.

Ratio Decidendi: For excise levy, an intermediate product must be shown to be marketable or capable of being bought and sold as goods; where the product is a distinct commodity with commercial utility and vendibility, captive consumption does not prevent duty liability.

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