Marketability test bars excise duty on intermediate steel structures cleared only for site assembly under a turnkey contract.

Fabricated steel structures cleared from the factory for site assembly under a turnkey contract were treated as intermediate parts of the final gantry crane, not as independent excisable goods. Applying the settled marketability test, the tribunal held that excise duty attaches only to goods having independent commercial identity and being capable of sale as such. As the cleared items were meant only for incorporation at the project site and lacked marketable character, the duty demand was not sustainable and was set aside, with consequential relief.

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Issues: Whether the fabricated steel structures cleared from the factory for assembly at the project site as part of a turnkey contract were intermediate goods not liable to central excise duty.

Analysis: The clearance was of partially processed fabricated structures meant only for incorporation into the final gantry crane at the site. The goods had no independent commercial identity as marketable products and were not capable of being sold as such. Following the settled principle that excise duty attaches only to goods that are marketable or capable of being marketed, the cleared items were treated as intermediate parts of the final structure and not as dutiable excisable goods by themselves.

Conclusion: The intermediate parts cleared for fabrication of the gantry crane were not liable to central excise duty, and the duty demand could not be sustained.

Final Conclusion: The duty demands were set aside and the appeals succeeded with consequential relief.

Ratio Decidendi: Intermediate goods cleared for site assembly under a turnkey contract are not excisable unless they are marketable or capable of being marketed as independent goods.

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