Marketability of intermediate goods must be proven on their own facts before excise duty can be sustained.

Marketability for excise purposes must be assessed against the intermediate product itself, not assumed from the saleability of the finished goods. In this dispute over duty on captively consumed sugar syrup used in exempt biscuits, the authorities erred by treating the marketability of biscuits as sufficient proof that the syrup was marketable. The record did not contain a proper factual inquiry into whether the syrup, as manufactured, was capable of being bought and sold or was known in the market as goods. The demand order was set aside and the matter was remanded for fresh determination on marketability.

---

---

Issues: Whether the duty demand on sugar syrup captively consumed in the manufacture of exempt biscuits could be sustained without a proper examination of the marketability of the intermediate product.

Analysis: The question of marketability had to be examined with reference to the intermediate product itself and not presumed merely because the final product was sold in the market. The authorities below proceeded on the footing that the marketability of the biscuits established the marketability of the sugar syrup and relied on the general principle that actual sale is not necessary, but capability of being sold in the market must be shown. The record did not show a proper factual analysis of whether the sugar syrup, as manufactured in the present cases, was capable of being bought and sold or was known in the market as goods. As the lower authorities failed to undertake that exercise, the demand could not be affirmed on the existing reasoning.

Conclusion: The demand order was set aside and the matter was remanded for fresh decision on the marketability of the intermediate product.

Ratio Decidendi: Marketability for excise purposes must be determined on the basis of the intermediate product itself, and not inferred solely from the marketability of the finished goods; the authority must first establish that the product is capable of being sold in the market or known as goods.

---