Marketability under excise law can exist for goods made to order, but excisability needs proper factual and contractual scrutiny.

Marketability under excise law does not depend on popular tradability in the open market and may exist even where goods are made for a single buyer. In disputes arising from erection and commissioning activity, excisability must be tested by examining the contractual terms, the nature of the work undertaken, and the actual goods produced. Where the record does not show such examination, a finding dropping duty demand and penalty cannot be sustained. The matter must therefore be reconsidered on a proper factual inquiry, and the dispute is remitted for fresh adjudication after hearing both sides.

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Issues: Whether the Commissioner (Appeals) was justified in dropping the duty demand and penalty on the ground that the goods manufactured in the course of erection and commissioning were not marketable, and whether the matter required re-examination on the facts and the terms of the agreement.

Analysis: The existing record did not show that the Commissioner (Appeals) had examined the contractual terms under which the work was undertaken or the nature of the activity and goods produced. Marketability does not depend upon popular tradability in the open market, and goods may still be marketable even where made for a particular buyer. The determination of excisability therefore required a factual enquiry into the agreement and surrounding circumstances, especially when the respondents relied on an earlier order without producing the relevant contracts for comparison.

Conclusion: The impugned order could not be sustained and the matter had to be reconsidered by the Commissioner (Appeals) in de novo proceedings.

Final Conclusion: The appeal was allowed and the dispute was sent back for fresh adjudication after hearing both sides.

Ratio Decidendi: Marketability under excise law does not require open-market popularity and may exist even where there is only a single buyer, but the conclusion must rest on a proper examination of the contractual terms and the actual nature of the manufactured goods.

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