Marketability of residual sludge failed on evidence, so the material was not treated as excisable goods.

Residual sludge generated during manufacture was found not to be marketable on the evidence, because it was removed in liquid form from pits and no conclusive material showed that it could be sold as a product. As marketability is an essential condition for excisable goods, the sludge could not be treated as liable to excise duty. The finding that marketability was not established was based on appreciation of evidence and constituted a finding of fact.

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Issues: Whether the sludge generated in the process of manufacture was marketable and, if not marketable, whether it could be treated as excisable goods liable to excise duty.

Analysis: The Tribunal, after remand, found on the evidence that the residual sludge discharged from the manufacturing chamber was removed in liquid state from pits and that no material had been produced to conclusively show that it was marketable. The conclusion that marketability was not established was based on appreciation of evidence and was a finding of fact.

Conclusion: The sludge was held not marketable and, therefore, not liable to excise duty.

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