Marketability and jurisdiction limits defeated excise duty and penalty on captive-use intermediate goods

Resin master and dipping solution used only as intermediate products for immediate captive consumption were not exigible to excise duty because they were neither marketed nor marketable, and manufacture alone did not attract levy. The adjudication confirming duty and penalty was also without jurisdiction, as it was concluded after deletion of the earlier procedural rules and introduction of Section 11-A, with no saving clause preserving the proceedings. The writ petition remained maintainable because the challenge went to jurisdiction, and the availability of an alternative statutory remedy did not preclude relief in the circumstances.

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Issues: (i) Whether resin master and dipping solution used within the factory for captive consumption were liable to excise duty notwithstanding the plea that they were not marketable goods; (ii) Whether the final order confirming duty and penalty was without jurisdiction because it was passed after deletion of Rules 10 and 173-J and introduction of Section 11-A; (iii) Whether the writ petition was not maintainable on the ground of availability of an alternative statutory remedy.

Issue (i): Whether resin master and dipping solution used within the factory for captive consumption were liable to excise duty notwithstanding the plea that they were not marketable goods.

Analysis: Excise duty is attracted by manufacture of goods, but the goods must answer the test of marketability and be capable of being bought and sold. The uncontroverted facts showed that the resin master and dipping solution were only intermediate products prepared and consumed within a continuous manufacturing process, had to be used immediately, could not be stored, and were neither marketed nor marketable. In such circumstances, mere manufacture within the premises did not justify levy under the tariff items relied on by the department.

Conclusion: The issue is answered in favour of the assessee. The goods were not liable to excise duty.

Issue (ii): Whether the final order confirming duty and penalty was without jurisdiction because it was passed after deletion of Rules 10 and 173-J and introduction of Section 11-A.

Analysis: The final order was made after the relevant rules had been deleted and Section 11-A had come into force. The Court treated the date of the final order as material and held that, in the absence of any saving clause preserving the earlier show-cause proceedings, the authority could not continue and conclude the matter under the deleted procedural framework.

Conclusion: The issue is answered in favour of the assessee. The impugned order was without jurisdiction.

Issue (iii): Whether the writ petition was not maintainable on the ground of availability of an alternative statutory remedy.

Analysis: The availability of an appeal did not bar writ relief where the challenge went to jurisdiction, and the petition had remained pending for several years. Relegating the petitioner to the statutory remedy at that stage would not have been just or appropriate.

Conclusion: The issue is answered in favour of the assessee. The writ petition was maintainable.

Final Conclusion: The impugned excise demand and penalty could not stand, both because the products were not shown to be marketable excisable goods and because the order was passed without jurisdiction under the then applicable procedural regime.

Ratio Decidendi: Goods used only for immediate captive consumption are not exigible to duty unless they are marketable, and an adjudication concluded after the governing procedural provisions have been deleted is invalid in the absence of a saving clause preserving the proceedings.

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