Marketability is essential for excise duty: captive intermediate sliver in yarn manufacture was not treated as dutiable goods.

Marketability remains an essential ingredient of excisable goods: a captive intermediate product used in a continuous manufacturing process is not dutiable unless it is a distinct commodity known to, and capable of sale in, the market. Applying that principle, the Court treated the sliver emerging during manufacture of semi-worsted carpet yarn as a transient in-process material with no shelf life, market identity, or practical capacity to be bought or sold, and therefore not exigible to central excise duty. The Court also rejected the alternative-remedy objection and examined the merits, noting the long pendency of the writ and the academic character of the challenge to certain provisions.

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Issues: (i) Whether the writ petition should be declined on the ground of availability of an alternative statutory remedy; (ii) whether the sliver emerging at an intermediate stage in the manufacture of semi-worsted carpet yarn is marketable goods liable to central excise duty.

Issue (i): Whether the writ petition should be declined on the ground of availability of an alternative statutory remedy.

Analysis: Though fiscal disputes ordinarily warrant recourse to statutory remedies, the petition had remained pending for a long period and the challenge to the validity of certain provisions had already become academic. On the materials placed, the Court found it appropriate to examine the merits rather than relegate the petitioner to the departmental forum.

Conclusion: The objection based on alternative remedy was rejected, and the writ petition was entertained on merits.

Issue (ii): Whether the sliver emerging at an intermediate stage in the manufacture of semi-worsted carpet yarn is marketable goods liable to central excise duty.

Analysis: The Court accepted the unrebutted materials and expert evidence showing that the sliver was only a transient in-process material, with no shelf life, no market identity, and no capacity to be packed, transported, bought, or sold without losing its character. Applying the settled principle that excise is attracted only to goods known to the market or capable of being sold as such, the Court held that a merely captive intermediate product without marketability cannot be treated as excisable goods. The Revenue's reliance on entries referring to sliver was held insufficient because the entry could only cover marketable sliver, such as that found in the worsted system.

Conclusion: The sliver in the petitioner's factory was not liable to excise duty.

Final Conclusion: The petition succeeded, the impugned duty demands were quashed, and the respondents were restrained from levying excise duty on the sliver produced in the petitioner's factory.

Ratio Decidendi: Marketability is an essential ingredient of excisable goods, and an intermediate product used captively in a continuous manufacturing process is not dutiable unless it is shown to be a distinct commodity known to, and capable of sale in, the market.

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