Intermediate sulphuric acid in a continuous process was not separately excisable because it was not a distinct marketable commodity.

Sulphuric acid generated in a closed, continuous double contact process and present in the circulation tank at an intermediate stage was not separately excisable, because the tank was only an in-process stage and not a final storage point. The acid was repeatedly regenerated and recirculated within the plant, remained unsegregated, and was not shown to be a distinct marketable commodity at that stage. The reasoning that duty could be imposed twice, first on the intermediate stage and again on final emergence, was rejected. The cited marketability precedent on physician's samples was found inapplicable on the facts, and the intermediate sulphuric acid was held not exigible to duty.

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Issues: Whether sulphuric acid emerging in the circulation tank at the intermediate stage was excisable and liable to central excise duty, and whether its removal for captive use or clearance under exemption notifications attracted duty.

Analysis: The manufacturing process showed that sulphuric acid was produced in a closed, continuous double contact process, with the circulation tank forming only an in-process stage and not a separate final stage of storage. The acid in the circulation tank was repeatedly regenerated and recirculated within the plant, remained unsegregated, and was not shown to be a distinct marketable commodity at that stage. The reasoning that duty could be levied twice, first at the intermediate stage and again at final emergence, was rejected because the material in the circulation tank remained sulphuric acid throughout and did not become a new excisable commodity. The decision relied on the settled distinction between mere existence of a product in an intermediate process and its excisability, and the authority found the cited marketability precedent concerning physician's samples inapplicable on the facts.

Conclusion: The intermediate sulphuric acid in the circulation tank was not exigible to duty, and the revenue's challenge failed.

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