Marketability governs excise duty on captive intermediate goods; notices for rubberised cotton fabric were quashed.

An intermediary product captively consumed in further manufacture is not exigible to excise duty unless it satisfies the marketability requirement and independently falls within the charging entry. Rubberised cotton fabric was admittedly not sold and was used only within the manufacturing process, so it did not qualify as goods for excise purposes. The amended Rules 9 and 49 of the Central Excise Rules, 1944 did not alter that position because they operate only where the article is otherwise excisable. The duty notices were therefore unsustainable and were quashed.

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Issues: Whether rubberised cotton fabric or friction cloth, being an intermediary product captively consumed in the manufacture of rubber beltings and not sold in the market, constituted goods exigible to excise duty and whether the amended Rules 9 and 49 of the Central Excise Rules, 1944 attracted duty liability.

Analysis: The levy under the charging provision applies only to excisable goods, and the concept of goods requires an article that ordinarily comes to the market to be bought and sold. The product in question emerged only as a stage in the manufacturing process, was admittedly not sold by the petitioners, and was consumed captively for further manufacture. On that footing, it did not satisfy the marketability requirement and could not be treated as goods within the charging provision. The amendments to Rules 9 and 49 did not alter this position because those rules only operate where the intermediary article independently falls within the excisable entry in the First Schedule.

Conclusion: The notices demanding duty on rubberised cotton fabric were unsustainable, and the levy could not be imposed on that intermediary product. The finding is in favour of the petitioners.

Final Conclusion: The writ petition was allowed and the impugned show-cause notices were quashed.

Ratio Decidendi: An intermediary product captively consumed in manufacture is not excisable unless it is marketable and independently falls within the charging entry for excise duty.

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