Captive consumption of an intermediate excisable product does not prevent central excise duty where the tariff expressly covers it.

An intermediate product used captively in a continuous manufacturing process was treated as excisable as an organic surface active agent under Item 15AA because it was accepted as an emulsifier and supported by chemical test evidence. The tariff entry was treated as sufficient for chargeability, so the absence of separate proof of manufacture in the abstract did not defeat duty. Amendments to Rules 9 and 49 by Section 51 of the Finance Act, 1982 were noted as confirming that intermediate products emerging in a continuous process can attract duty when they are excisable goods and are removed within the factory for further manufacture. Captive consumption and non-marketing did not exclude the levy under Section 3.

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Issues: Whether an intermediate product used captively in a continuous manufacturing process was excisable as an organic surface active agent under Item 15AA, and whether absence of marketability or the element of manufacture displaced the levy.

Analysis: The product was accepted as an emulsifier and, on the basis of the chemical test report, as an organic surface active agent. Since such goods were specifically covered by Item 15AA of the Central Excise Tariff Schedule, the question whether the process amounted to manufacture was not for chargeability. The amendment of Rules 9 and 49 by Section 51 of the Finance Act, 1982 also made clear that intermediate products emerging in a continuous process could attract duty when they were excisable goods and were removed within the factory for further manufacture. The fact that the product was not marketed and was used only for captive consumption did not take it out of the charging provision, because Section 3 levies duty on manufacture without making a distinction between goods for sale and goods for self-consumption.

Conclusion: The product was held liable to excise duty as an organic surface active agent, and the assessee's objections based on intermediate character, captive consumption, and absence of marketing were rejected.

Final Conclusion: The tariff entry governed the levy, and the appeal failed on merits.

Ratio Decidendi: Where a product is specifically enumerated in the tariff as excisable goods, liability to central excise does not depend on proof of manufacture in the abstract or on whether the goods are marketed rather than captively consumed.

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