Marketability test under excise law excludes in-process materials, while commercially marketed steam remains dutiable in principle.

Intermediate materials used in jute manufacture, namely emulsified refined diesel oil as jute batching oil and sizing paste, were not treated as excisable goods because they had no shelf life, were not capable of meaningful storage, and failed the marketability test under Section 3 of the Central Excises and Salt Act, 1944. Steam generated for captive consumption was treated differently because it was commercially known and marketed to a limited extent, so duty was attracted in principle; however, the duty already paid was remitted and held refundable, and the related demand was vacated.

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Issues: (i) Whether emulsified refined diesel oil used as jute batching oil and sizing paste retained after manufacture were goods chargeable to central excise duty; (ii) whether steam generated for captive consumption was liable to duty and, if duty had been paid, whether refund/remission was admissible.

Issue (i): Whether emulsified refined diesel oil used as jute batching oil and sizing paste retained after manufacture were goods chargeable to central excise duty.

Analysis: The decisive test applied was marketability under Section 3 of the Central Excises and Salt Act, 1944. The emulsified refined diesel oil and sizing paste had no shelf life, could not be stored for any meaningful period, and were only intermediate materials used immediately in the manufacturing process. On that factual footing, they were not commercially marketable goods.

Conclusion: The emulsified refined diesel oil and sizing paste were not goods chargeable to duty and were only in-process materials.

Issue (ii): Whether steam generated for captive consumption was liable to duty and, if duty had been paid, whether refund/remission was admissible.

Analysis: Steam was treated differently because it was commercially known and marketed to a limited extent as goods. Although duty was therefore attracted in principle, the order recorded that, in view of the Government of India's order and the applicable exemption/remission position, the duty already paid was not to be retained.

Conclusion: Steam was liable to duty in principle, but the duty already paid was remitted and refundable.

Final Conclusion: The duty demands were set aside, and the amounts already paid were directed to be refunded, with the demand already raised but not honoured also vacated.

Ratio Decidendi: For central excise, intermediate materials that are not commercially marketable and have no shelf life are not goods under Section 3 of the Central Excises and Salt Act, 1944, though steam may be treated as goods if commercially known and marketed.

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