Marketability and RG-I stage control excise duty and remission for aerated water not fully manufactured.

Aerated water drained before bottling, or bottles that were over-filled or under-filled and had not reached the RG-I stage, were not treated as completely manufactured excisable goods. Goods that had not attained marketability and were not entered in RG-I could not be regarded as finished goods capable of attracting duty. The remission scheme under Rule 21 applies only to completely manufactured goods already recorded in RG-I, and not to goods stopped before that stage. On that basis, the duty demand was held unsustainable and relief was available to the assessee.

---

---

Issues: Whether aerated water drained before bottling, and over-filled or under-filled bottles that had not reached the RG-I stage, were complete manufactured excisable goods so as to attract duty and remission under Rule 21 of the Central Excise Rules, 1944.

Analysis: The drainage occurred either before bottling or in respect of bottles that were not filled to the declared quantity. Goods that do not attain the stage of marketability and have not been entered in RG-I cannot be treated as completely manufactured excisable goods. Since the goods had not reached RG-I stage, the premise that they were finished goods capable of sale was not accepted. The scheme of remission of duty applies to completely manufactured goods entered in RG-I, not to goods that have not yet attained that stage.

Conclusion: The demand of duty was not sustainable and the assessee was entitled to relief.

Ratio Decidendi: Duty and remission provisions apply only to goods that have attained marketable, fully manufactured status and the RG-I stage; goods stopped before that stage cannot be treated as finished excisable goods for duty liability.

---