Excise duty not applicable on bleach liquor for captive use, Tribunal rules in favor of Respondents

The Tribunal rejected the Revenue's appeals, affirming that the bleach liquor manufactured by the Respondents for captive use is not subject to Central Excise duty. The Tribunal emphasized the importance of marketability in determining excisability, noting the lack of concrete evidence from the Revenue to establish the marketability of the product. Despite arguments based on classification and legal precedents, the Tribunal sided with the Respondents, considering factors such as the product's short shelf life and instability, as highlighted by expert opinions.

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Issues: Whether bleach liquor manufactured and used captively in the manufacture of paper is excisable to Central Excise duty, and whether the Revenue established its marketability.

Analysis: The decisive test for levy of excise duty is that the product must be "goods", meaning an article capable of being bought and sold in the market and known to the market. Mere specification in the tariff does not by itself render a product dutiable. The record showed that bleach liquor was prepared fresh in the continuous paper-manufacturing process, had a very short shelf life, remained unstable, and could not be taken out and marketed. The Revenue did not adduce technical material, chemical analysis, or other evidence to rebut the finding that the product was not marketable. Reliance on tariff entry or HSN description was insufficient to displace the basic requirement of marketability. The claim that captive consumption displaced exemption was not accepted because the foundational requirement of excisability itself was not proved.

Conclusion: Bleach liquor, on the facts found, was not proved to be marketable goods and therefore was not liable to Central Excise duty; the Revenue's appeals failed.

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