Marketability of captively consumed intermediate goods must be decided first before sustaining excise duty demand.

Duty on a captively consumed intermediate product cannot be sustained unless the product is first shown to be marketable and excisable. Marketability is a material issue directly affecting tax liability, not merely a factual detail. Because this contention had been raised but not decided by the lower appellate authority, the demand could not be finally upheld on the existing record. The matter was remanded for fresh adjudication after giving the assessee an opportunity to present its case on marketability and excisability.

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Issues: Whether the intermediate product, polystyrene sheets in crude form, was required to be examined for marketability and excisability before sustaining duty demand, and whether the matter deserved remand when that issue had not been considered by the lower appellate authority.

Analysis: Duty was demanded on an intermediate product captively consumed in the manufacture of exempt final products. In such a situation, it had first to be established that the intermediate product was an excisable commodity capable of being brought to market for sale and purchase. Marketability was therefore relevant not merely as a question of fact but also as a question bearing directly on tax liability. Since the contention on marketability had been raised before the lower appellate authority but not adjudicated, the order could not be sustained. The proper course was to have the issue examined afresh after giving the appellants an opportunity to place their case.

Conclusion: The demand could not be finally upheld without a finding on marketability and excisability, and the matter was remanded to the original authority for fresh decision.

Ratio Decidendi: Where duty is demanded on a captively consumed intermediate product, its marketability and excisability must be determined first, and failure to consider that issue warrants remand for fresh adjudication.

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