Commercially understood glass intermediates can be excisable goods; duty demand is curtailed for the period barred by limitation.

Glass lumps emerging during manufacture of glass wool and glass staple tissue were treated as excisable goods because "glass" was understood in its trade sense, the product emerged from a distinct manufacturing process, and limited or captive marketability did not prevent duty liability. The intermediate product could still be goods if it was marketable within the relevant trade, even if not ordinarily sold. The duty demand was, however, time-barred for the period before the first effective departmental notice, so the levy had to be curtailed and recomputed for the remaining period.

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Issues: (i) Whether the glass lumps emerging in the course of manufacture of glass wool and glass staple tissue were classifiable as glass under Item 23A(4) of the Central Excise Tariff Schedule and were liable to duty as goods. (ii) Whether the duty demand for the period from 1-3-1975 to 22-10-1976 was barred by limitation.

Issue (i): Whether the glass lumps emerging in the course of manufacture of glass wool and glass staple tissue were classifiable as glass under Item 23A(4) of the Central Excise Tariff Schedule and were liable to duty as goods.

Analysis: The expression "glass" was held to be of wider scope than "glassware", and the material was to be understood in the sense in which it is known in trade. The appellants themselves described the substance as glass lumps and the end product as glass staple fibre, which supported the conclusion that the material was glass in commercial understanding. The conversion of silica sand, soda ash, borax/rasorite and other inputs into glass lumps involved a substantial transformation with a distinct name, character and use, amounting to manufacture. Limited or specialised marketability did not negative excisability, and the fact that other manufacturers were not interested in purchasing the lumps did not establish that they were not goods. The product could still be marketable to persons in the relevant trade, and the fact of captive or intermediate use did not by itself exclude duty.

Conclusion: The glass lumps were rightly held to be excisable goods falling within Item 23A(4) for the relevant period after 1-3-1979.

Issue (ii): Whether the duty demand for the period from 1-3-1975 to 22-10-1976 was barred by limitation.

Analysis: The plea of limitation was raised only at a very late stage and was not taken before the lower authorities or in the memorandum of appeal to the Tribunal. Even so, the materials showed that the first departmental communication calling upon the assessees to treat the product as dutiable was dated 22-10-1981. On that basis, the demand could not cover the period before 23-10-1976. The demand for the earlier period was therefore outside limitation.

Conclusion: The demand for the period from 1-3-1975 to 22-10-1976 was time-barred.

Final Conclusion: The classification of the glass lumps and the levy of duty were sustained for the relevant period, but the demand had to be curtailed for the portion found to be beyond limitation, requiring reworking of the duty payable.

Ratio Decidendi: A commercially understood glass intermediate product that emerges from a distinct manufacturing process, is collected for use, and is marketable within the relevant trade can be excisable even if it is not ordinarily sold or has a specialised market; a duty demand cannot survive for the period found to be beyond limitation on the facts governing the first effective departmental notice.

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