Marketability of captively consumed intermediate goods must be proved on actual factory emergence, not assumed from stock transfers.

For captively consumed intermediate goods, excise duty can be sustained only if the Revenue proves that the goods are marketable in the form and condition in which they emerge in the factory. In the absence of positive evidence of marketability, duty on such intermediate products cannot be maintained. A stock transfer of gold chloride solution from another unit does not by itself establish that the in-process product in the assessee's factory was the same marketable commodity, particularly where no sample testing or other proof showed matching quality or purity. The core principle is that marketability must be established on the actual goods in issue.

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Issues: (i) Whether the intermediate products, other than gold chloride solution, were marketable and liable to excise duty when captively consumed; (ii) Whether gold chloride solution emerging in the assessee's factory was marketable and dutiable on the evidence relied upon by the Revenue.

Issue (i): Whether the intermediate products, other than gold chloride solution, were marketable and liable to excise duty when captively consumed.

Analysis: The Tribunal held that in the absence of positive evidence from the Revenue showing that the intermediate products had marketability in the form and condition in which they emerged and were consumed, excise duty could not be sustained. The earlier decision in identical matters was followed, and the general principle applied was that marketability must be proved by the Revenue in respect of captively consumed intermediate goods.

Conclusion: The issue was decided in favour of the assessee, and no duty demand survived on these intermediate products.

Issue (ii): Whether gold chloride solution emerging in the assessee's factory was marketable and dutiable on the evidence relied upon by the Revenue.

Analysis: The Tribunal found that the stock transfer of gold chloride solution from another unit did not by itself establish that the intermediate product arising in the assessee's factory was the same product, in the same quality, as a marketable commodity. No sample testing or other positive evidence showed that the in-process product had the same marketable characteristics as the goods cleared from the other unit, and the burden remained on the Revenue to prove marketability of the actual intermediate product in issue.

Conclusion: The issue was decided in favour of the assessee, and the demand on gold chloride solution was unsustainable.

Final Conclusion: The impugned order was set aside on merits and the appeals were allowed with consequential relief.

Ratio Decidendi: For captively consumed intermediate goods, excise duty can be sustained only if the Revenue proves marketability of the goods as they emerge in the assessee's factory, and marketability cannot be inferred merely from stock transfer, general advertisements, or comparison with goods of different quality or purity.

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