Marketability is essential for excise duty on intermediate products; Revenue must prove it before demand can stand.

Additional excise duty demands must be issued under the correct levy framework, but a notice is not invalid solely because it omits the exact enactment or cites the wrong statute where the basis of demand is otherwise clear. For intermediate products, excisability depends on both manufacture and marketability, and the burden to prove marketability lies on the Revenue. Where that evidence is absent, the demand cannot be sustained on the existing record. The matter therefore requires fresh adjudication limited to marketability, with the Department permitted to lead evidence and any consequential relief to follow from that finding.

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Issues: (i) Whether the demand notices were vitiated because the correct enactment for levy of additional excise duty was not properly invoked. (ii) Whether the intermediate heat-set woven greig fabric was marketable and therefore liable to additional duty of excise, and whether the matter required fresh adjudication on marketability.

Issue (i): Whether the demand notices were vitiated because the correct enactment for levy of additional excise duty was not properly invoked.

Analysis: The notices were criticised for not expressly naming the governing enactment and, in one notice, mentioning the wrong statute. However, the notices also invoked the central excise law applicable by reference to the levy under the additional duties regime, and the rates communicated in the notices made the basis of demand clear. The defect was treated as a serious lapse, but not one that by itself destroyed the levy.

Conclusion: The demand notices were held not to be invalid solely on this ground.

Issue (ii): Whether the intermediate heat-set woven greig fabric was marketable and therefore liable to additional duty of excise, and whether the matter required fresh adjudication on marketability.

Analysis: The Court accepted that manufacture could be attracted by the heat-setting process, but held that excisability also depends on marketability. It found that the earlier view placing the burden on the assessee was not acceptable in the light of the Supreme Court decisions cited, under which the burden to prove marketability lies on the Revenue. Since the Department had not discharged that burden on the record before it, the Court considered that the assessee would have succeeded on merits. At the same time, it noted the Department's belief that the earlier Tribunal ruling relieved it of the need to adduce such evidence, and therefore considered it fair to permit fresh evidence on marketability.

Conclusion: The matter was held to require remand for limited re-adjudication on marketability, with liberty to the Department to lead evidence.

Final Conclusion: The order confirming duty and penalty was set aside, and the case was sent back for a fresh decision confined to whether the intermediate product was marketable, with consequential relief to depend on that finding.

Ratio Decidendi: An intermediate product is chargeable to excise or additional excise duty only if the Revenue establishes both manufacture and marketability, and where marketability is not proved on record the demand cannot be sustained without fresh adjudication.

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