Marketability of captive production media failed to justify excise duty under Heading 38.21.

Captive production media used in the manufacture of antibiotics was analysed for excisability under Heading 38.21 on the basis of whether it constituted prepared culture media and whether marketability was proved. The material emerged as a bulk aqueous medium, was not dehydrated or packed in sealed sterile condition, and was not shown to be marketable in the form in which it arose. The absence of proved shelf life and its transitory character were treated as significant factors, with technical literature and precedent supporting the view that marketability had not been established. The product was therefore held not excisable, and the duty demand and allied liabilities were set aside.

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Issues: Whether the intermediate product described as production media and used captively in the manufacture of antibiotics was excisable and marketable so as to attract duty under Heading 38.21.

Analysis: The product in question was a bulk aqueous production medium arising in the course of manufacture of Streptomycin and Tetracycline and was used within the assessee's factory. The reasoning turned on whether it answered the description of prepared culture media and whether the Revenue had established marketability. The record showed that the material was not dehydrated, not packed in sealed sterile condition, and was not shown to be marketable in the form in which it emerged. The absence of proved shelf life and the transitory nature of the product were treated as material factors, and the cited technical literature and precedent supported the view that marketability had not been established.

Conclusion: The product was held not to be marketable or excisable, and the duty demand and allied liabilities were set aside in favour of the assessee.

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