Marketability determines excisability, and a duty-paid surface-active preparation may qualify for exemption when industrial-use conditions are met.

Marketability is decisive for excisability: Sandogen NH Conc. was treated as an organic surface active agent intended for sale, and the available record supported its commercial marketability, so it was held excisable and dutiable under Item 15AA. A preparation made from that duty-paid concentrated product, Sandogen NH Liquid, was covered by Notification No. 101/66 because the test report and product literature showed it to be an industrial preparation used in textile manufacture and falling within the notification's scope for emulsifiers, wetting-out agents, softeners and similar preparations. The assessee's classification and exemption claim was therefore sustained.

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Issues: (i) whether Sandogen NH Conc. was marketable and therefore excisable and dutiable under Item No. 15AA of the First Schedule to the Central Excises and Salt Act, 1944; (ii) whether Sandogen NH Liquid, being a preparation made from the duty-paid concentrated product, was entitled to exemption under Notification No. 101/66 dated 17-6-1966.

Issue (i): whether Sandogen NH Conc. was marketable and therefore excisable and dutiable under Item No. 15AA of the First Schedule to the Central Excises and Salt Act, 1944

Analysis: The approved classification list of 28-5-1973 showed that the concentrated product had been treated as a product intended for sale and duty had been paid on it. The record did not establish the Department's claim that the product was not marketed or not marketable. The evidentiary material available supported the view that the product answered the description of an organic surface active agent and had commercial marketability.

Conclusion: Sandogen NH Conc. was held to be excisable and dutiable under Item No. 15AA.

Issue (ii): whether Sandogen NH Liquid, being a preparation made from the duty-paid concentrated product, was entitled to exemption under Notification No. 101/66 dated 17-6-1966

Analysis: The chemical test report described the liquid product as a preparation composed of organic surface active agent and brought it within Serial No. 4 of the notification covering emulsifiers, wetting-out agents, softeners and other preparations prepared for any industrial process ancillary to manufacture of goods. The product literature also showed its use in an industrial process connected with textile manufacture. Since the liquid preparation was made out of duty-paid surface active agent, the condition for exemption was satisfied.

Conclusion: Sandogen NH Liquid was held eligible for exemption under Serial No. 4 of Notification No. 101/66.

Final Conclusion: The departmental challenge failed, and the assessee's classification and exemption position was sustained.

Ratio Decidendi: Marketability is a decisive element in determining excisability, and a preparation made from duty-paid surface active agents falls within the exemption where it is covered by the notification and satisfies its specified industrial-use conditions.

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