Marketability test for captive intermediate goods: wort was not shown to be excisable, so no central excise duty applied.

CESTAT Mumbai held that an intermediate product used captively in beer manufacture is dutiable only if the Department proves it is marketable and capable of being bought and sold as goods. On the record, the Revenue produced no material to show that wort had marketability, and the Tribunal found no basis to depart from its earlier view on regulatory controls and captive consumption. In the absence of proof that wort was excisable goods, it could not be subjected to central excise duty, and classification did not arise.

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Issues: Whether wort, an intermediate product used captively in the manufacture of beer, was marketable and therefore liable to central excise duty.

Analysis: The Tribunal followed its earlier decision in the assessee's own case, where it had been held that an intermediate product can be subjected to duty only if the Department discharges the burden of proving that it is marketable. On the record before it, no material was brought by the Revenue to show that wort was capable of being bought and sold in the market. The Tribunal also found no evidence to depart from its earlier view on the effect of regulatory controls and captive consumption. In the absence of proof of marketability, the product could not be treated as excisable goods, and the question of classification did not arise.

Conclusion: Wort was not proved to be marketable excisable goods, and no duty was payable on it.

Ratio Decidendi: An intermediate product is dutiable only if the Department proves that it is marketable and capable of being bought and sold as goods; without such proof, captive consumption by itself does not attract central excise duty.

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