Marketability determines excise duty: a sellable perfumery compound remained taxable despite no actual sale and no circular-based exemption.

Marketability, not actual sale, is the decisive test for excise duty: a manufactured product is exigible if it is capable of being bought and sold, even if no sale has occurred. A departmental circular dealing with non-marketable intermediate mixtures in agarbathi manufacture could not be treated as an exemption notification or extended to a liquid perfumery compound that was stored, transported and sold in the open market. On those facts, the perfumery compound was marketable and excisable, and the duty demand was sustained.

---

---

Issues: (i) Whether Board Circular No. 495/61/99-CX.3 dated 22.11.1999 exempted the perfumery compound manufactured by the respondent from excise duty; and (ii) whether actual marketing or sale of the perfumery compound was necessary for levy of excise duty.

Issue (i): Whether Board Circular No. 495/61/99-CX.3 dated 22.11.1999 exempted the perfumery compound manufactured by the respondent from excise duty.

Analysis: The circular was issued in the context of agarbathi manufacture carried on in a continuous process, where the odoriferous compound arises as an intermediate paste or dough mixed with the agarbathi material and is not ordinarily sold in the market. It only clarified that such non-marketable intermediate mixtures are not excisable. The respondent, however, manufactured perfumery compound in liquid form, stored and transported it in barrels or drums, and the material was capable of being sold in the open market. A circular cannot be treated as an exemption notification or extended beyond its limited context.

Conclusion: The circular did not exempt the respondent's perfumery compound from excise duty.

Issue (ii): Whether actual marketing or sale of the perfumery compound was necessary for levy of excise duty.

Analysis: Excise duty depends on manufacture and marketability, not on proof of actual sale. Goods are exigible if they are capable of being bought and sold in the market. Actual marketing is irrelevant once marketability is established. On the facts, the perfumery compound had shelf life, could be stored, transported and sold, and some quantity had in fact been sold to a purchaser.

Conclusion: Actual sale was not necessary, and the perfumery compound was marketable and excisable.

Final Conclusion: The perfumery compound manufactured by the respondent was held to be an excisable product, the demand for duty was sustained, and the Revenue's challenge succeeded.

Ratio Decidendi: For levy of excise duty, the decisive test is marketability of the manufactured product; actual sale is not required, and a departmental circular cannot override or enlarge the limited class of non-marketable intermediate products to grant an exemption.

---