Marketability is essential for excise duty: gas condensate used captively was held non-excisable absent proof of market sale.

NCCD cannot be levied on gas condensate or heavier hydrocarbons classified under Heading 2709 unless the Revenue proves marketability and excisability. The text states that the product emerged as an unstable intermediate stream, was captively consumed in the manufacture of naphtha or mixed fuel oil, and no evidence showed it was bought, sold, transported, or otherwise known as a commercial commodity. Mere tariff classification was insufficient without proof that the product was marketable. On that basis, the demand, penalty, and interest were unsustainable.

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Issues: Whether NCCD was leviable on the heavier hydrocarbons described as gas condensate and classified under Heading 2709, when the Department failed to establish that the product was marketable and the product was captively consumed in the manufacture of Naphtha or mixed fuel oil.

Analysis: The product emerging in the course of processing natural gas was described as heavier hydrocarbons or gas condensate. The Department treated it as NGL and sought NCCD, but the respondent's case was that the product was an unstable intermediate stream, immediately used in the next stage of manufacture. The burden lay on the Department to prove marketability before excise duty could be fastened. No evidence was produced to show that the product was bought, sold, transported, or otherwise known in the market as a commercial commodity. The product was found to be highly volatile and not marketable in the practical sense, and therefore not an excisable product notwithstanding its classification under Heading 2709.

Conclusion: NCCD was not leviable on the gas condensate because it was not marketable and hence not excisable; the demand, penalty, and interest were unsustainable.

Ratio Decidendi: Excise duty and NCCD cannot be levied on a product unless the Revenue proves that it is marketable and therefore excisable, and mere tariff classification is insufficient in the absence of proof of marketability.

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