Marketability of intermediate goods determines excise liability where specially manufactured castings lack real market saleability.

Aluminium castings manufactured as an intermediate product for spring brake chambers supplied to a Defence Ministry vehicle factory were held not marketable on the facts. They were made to the factory's specifications, were unsuitable for private motor vehicle manufacturers, and their sale or disclosure was restricted by secrecy obligations under the supply arrangement. As the Department failed to show that the castings had any real marketability, excise duty was not attracted. The duty demand on the intermediate goods was therefore unsustainable and the confirmation order was set aside.

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Issues: Whether aluminium castings manufactured as an intermediate product for spring brake chambers supplied to a Defence Ministry vehicle factory were marketable and therefore liable to excise duty.

Analysis: The castings were made to the specifications of the Defence Ministry factory, were not suitable for use by private motor vehicle manufacturers, and their sale or disclosure was restricted by the supply arrangement invoking secrecy obligations. On these facts, the Department did not establish that the castings had any real marketability. Since excise duty is attracted only to goods capable of being marketed, the absence of marketability meant that the intermediate castings could not be subjected to duty.

Conclusion: The aluminium castings were not marketable and no excise duty was leviable on them; the assessee succeeded.

Final Conclusion: The duty demand on the intermediate castings was unsustainable and the order confirming the demand was set aside.

Ratio Decidendi: Intermediate goods are not chargeable to excise duty unless they are shown to be marketable in fact and capable of being sold in the market.

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