Marketability requirement controls excise duty on captive intermediate goods used in railway wagon manufacture.

Intermediate goods captively used in the manufacture of railway wagons were treated as excisable only if the Department proved marketability. Although the parts amounted to manufactured goods and were used in job work for Indian Railways, excise duty could not be levied because marketability was specifically disputed and no evidence was produced to establish that the goods were marketable. The stated ratio is that captive use of intermediate goods does not by itself attract excise duty unless marketability is shown.

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Issues: Whether intermediate parts used captively in the manufacture of railway wagons were exigible to excise duty in the absence of evidence that they were marketable.

Analysis: The parts manufactured for use in railway wagons were intermediate products and were used captively in job work for the Indian Railways. Although such goods may fall within the concept of manufacture, excise duty could not be levied unless the Department established that the goods were marketable. The assessee had specifically disputed marketability, but no evidence was led to prove that the goods were marketable.

Conclusion: The goods were not shown to be marketable, and therefore they could not be subjected to excise duty.

Final Conclusion: The Tribunal's order was set aside and the appeal was allowed, with the assessee succeeding on the requirement of marketability for duty liability on the intermediate goods.

Ratio Decidendi: Intermediate goods captively used are not exigible to excise duty unless their marketability is proved by the Department.

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