Marketability remains essential for excise duty; captive-use methane gas was not taxable without proof of saleability.

Methane gas specified in the tariff schedule was not liable to excise duty because marketability remained an essential condition for excisability. The Revenue had to prove that the captive-use gas was capable of sale and known to the market, but no such evidence was adduced. The finding that the gas was not marketable was treated as a finding of fact, and the burden of establishing marketability was not discharged. On that basis, the assessee was not charged to excise duty on the captive methane gas.

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Issues: Whether methane gas, though specified under Chapter Heading 2711.29 of the Central Excise Tariff Act, 1985, was liable to excise duty when used captively and not marketed, in the absence of proof of marketability.

Analysis: Liability to excise duty does not arise merely because an article is specified in the tariff schedule. Marketability is an essential ingredient for excisability, and the goods must be shown to be salable and known to the market. The finding that the methane gas produced in the course of manufacture was not marketable was a finding of fact. The Revenue did not adduce evidence to prove marketability, and the burden of establishing that essential requirement was not discharged.

Conclusion: The methane gas was not exigible to excise duty, and the assessee succeeded on the question of marketability.

Final Conclusion: The appeal failed because the Revenue could not establish that the captive-use methane gas answered the requirement of marketability necessary for excise duty.

Ratio Decidendi: An item specified in the tariff becomes liable to excise duty only if it is marketable; in the absence of proof of marketability, no duty can be levied.

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