Intermediate chemical process products and excise duty: whether tariff-listed intermediates are "goods" without proof of marketability; appeals dismissed.

Excisability of intermediate products arising during an integrated chemical process was in issue, specifically whether such intermediates were "goods" liable to excise duty absent proof of marketability. The SC held that even if an intermediate is specified in the tariff, duty cannot be levied unless it satisfies the marketability test; the appellate authority's factual finding that the intermediates were inseparable, transient process products not known in commercial parlance and not shown capable of being bought and sold was unchallenged. Mere mention in dictionaries, tariff entries, or drawback rules did not establish marketability. Consequently, the intermediates were not exigible to excise duty and the appeals were dismissed.

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Issues:
Manufacture of intermediate products liable to excise duty, Marketability of intermediate products for levy of excise duty.

Analysis:
The judgment revolves around the manufacturing process of certain intermediate products during the production of insecticides, fungicides, weedicides, and pesticides falling under a specific Tariff sub-heading. The Collector of Central Excise initially held these intermediate products liable for excise duty. However, the respondents appealed before the Collector (Appeals), who exonerated the products from the duty. Subsequently, the Revenue's appeals against this decision were dismissed by the CEGAT, leading to the appeals being filed in the Supreme Court.

The Court reiterated that excise duty is levied on goods specified in the Schedule, with the taxable event being the manufacture of goods. For a product to be excisable, it must be marketable, even if not actually sold. The test of marketability is crucial, and intermediate products can be subject to excise duty if they meet this criterion. The judgment cited previous cases to emphasize that excise duty is linked to production for sale in the market, requiring the goods to be distinct commodities known for buying and selling.

In this case, the Court examined whether the intermediate products in question were marketable. The Collector (Appeals) found that these products were part of an integrated chemical process and were not separable or capable of being marketed in their current form. The department failed to prove marketability, and the Tribunal upheld this finding. Mere mention of the products as "goods" in dictionaries or tariff schedules was deemed insufficient to establish marketability. The Tribunal rightly concluded that for excisability, the products must be capable of being bought and sold in the market.

Ultimately, the Court upheld the Tribunal's decision, stating that the intermediate products were not marketable and thus not liable for excise duty. The appeals were dismissed, emphasizing that the products did not meet the test of marketability required for excisability. The judgment did not award costs, as the appeals lacked merit.

In conclusion, the judgment clarifies the criteria for excisability based on marketability of goods and highlights the importance of proving marketability for intermediate products to be subject to excise duty.

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