Marketability Test in Excise Duty: impure nitrogen gas from gas holders was not taxable without proof of saleability

Nitrogen gas released into the atmosphere from gas holders during manufacture was held not liable to central excise duty because marketability is an essential condition of excisability. Goods must be capable of being bought or sold in the market; a crude, unstable, or impurity-laden product requiring further processing does not satisfy that test merely because it falls within the tariff. On the stated facts, the nitrogen gas was not shown to be saleable as such, and the revenue did not prove that purification was unnecessary or only incidental to packing. The burden of establishing marketability was therefore not discharged, so no excise duty was leviable.

---

---

Issues: Whether nitrogen gas released into the atmosphere from gas holders during the manufacturing process was liable to central excise duty despite the claim that it was not marketable.

Analysis: Goods are exigible to excise only when they are manufactured and are also marketable. Marketability means capability of being bought or sold in the market, and goods in a crude or unstable form requiring further processing before they can be marketed do not satisfy that test merely because they fall within the tariff. On the facts, the nitrogen gas with impurities released from the gas holders was not shown to be capable of sale as such. The revenue also failed to establish that the purification process was unnecessary or merely incidental to packing. The burden of proving marketability was not discharged.

Conclusion: The nitrogen gas released from the gas holders was not marketable and no excise duty was leviable on it.

---