Marketability test for excise duty: unfinished intermediate rubberised fabric sheets were held not to be excisable goods.

Intermediate rubberised cotton fabric sheets arising during manufacture of V. Link Beltings were not excisable goods because excise duty under Section 3 of the Central Excises and Salt Act, 1944 applies only to goods that are produced or manufactured in India and are marketable as distinct commercial commodities. The material showed only an unfinished in-process product with no separate use except as a component in further manufacture, and the department failed to prove a general market or saleable commercial identity. On that basis, the product was held not liable to excise duty, in favour of the assessee.

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Issues: Whether the intermediate product arising in the manufacture of V. Link Beltings, being rubberised cotton fabric sheets at an unfinished stage, constituted excisable goods liable to duty.

Analysis: Excise duty under Section 3 of the Central Excises and Salt Act, 1944 is attracted only to excisable goods that are produced or manufactured in India. An intermediate product in the course of manufacture, which is not marketable and has no distinct use except as a material in a further manufacturing process, does not satisfy that description. The material on record did not establish that the product at the relevant stage had a general market or was known as a saleable commercial commodity. The evidence relied upon by the department was found insufficient to show marketability.

Conclusion: The intermediate rubberised cotton fabric sheets were not excisable goods and were not liable to excise duty; the finding is in favour of the assessee.

Ratio Decidendi: A product emerging only as an intermediate, unfinished stage of manufacture is not exigible to excise unless it is marketable as goods with a distinct commercial identity and use.

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