Marketability of excisable intermediate goods must be independently proved before duty is confirmed on captive use.

Duty on an excisable intermediate product arises only if the product is independently shown, on evidence relating to that product, to be marketable or capable of being sold as goods. Actual sale is not decisive, but the department must establish marketability by examining the material on record; a finding based only on the exemptibility or marketability of the final product is insufficient. Applying that principle, the finding on sugar invert syrup could not be sustained. The impugned orders were set aside and the matter was remanded for de novo adjudication on marketability after granting a reasonable opportunity of hearing.

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Issues: Whether the intermediate product, sugar invert syrup, was marketable and therefore liable to central excise duty when used captively in the manufacture of exempt biscuits.

Analysis: Duty liability on an intermediate product depends on whether the product is shown, on the basis of evidence relating to that product, to be marketable or capable of being sold as goods. Actual sale is not decisive, but the department must establish marketability by analysing the material on record. A finding resting only on the exemptibility of the final product, or on a general opinion without testing the disputed product, is insufficient.

Conclusion: The finding on marketability could not be sustained and the matter required fresh adjudication after proper examination of the evidence.

Final Conclusion: The impugned orders were set aside and the cases were remanded to the adjudicating authority for de novo decision on marketability after granting a reasonable opportunity of hearing to the assessees.

Ratio Decidendi: Marketability of an excisable intermediate product must be independently established on the evidence relating to that product, and duty cannot be confirmed merely because the final product is exempt or marketable.

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