Marketability is essential for excise duty on captive wagon parts; absence of proof defeats the demand.

Intermediate or captive goods are liable to central excise duty only if the Revenue proves that they are marketable and recognised in the market as distinct identifiable commodities. Applying that settled principle, the Tribunal found no evidence that the wagon parts, including under-frame and other components, had independent marketability. Mere inclusion in the tariff schedule was held insufficient to attract duty without proof of marketability. The demand was therefore not sustainable, the order dropping the duty was sustained, and the Revenue's challenge failed.

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Issues: Whether the parts of railway wagons manufactured and captively consumed in the manufacture of railway wagons were liable to central excise duty in the absence of proof that they were marketable or otherwise identifiable as excisable goods.

Analysis: The Tribunal followed the settled position that excise duty on intermediate or captive products can be sustained only if the Revenue establishes that the goods are marketable and known in the market as distinct identifiable commodities. On the facts, the record did not show that the parts such as under-frame and other wagon components had independent marketability. The earlier decision in the same line of dispute had already held that the Department had failed to discharge the burden of proving marketability, and that view had been affirmed in subsequent judicial consideration. The Tribunal also relied on the principle that mere inclusion in the tariff schedule is not enough to attract duty where marketability is not proved.

Conclusion: The wagon parts were not shown to be marketable excisable goods, and the demand of central excise duty was not sustainable. The Revenue's appeal failed and the assessee succeeded.

Final Conclusion: The impugned order dropping the duty demand was sustained, and the Revenue's challenge was rejected.

Ratio Decidendi: Intermediate or captive goods are chargeable to excise duty only when the Revenue proves that they are marketable and constitute distinct identifiable commodities.

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