Manufacture and marketability test excludes zinc dross and skimmings from excise duty liability.

Zinc dross, flux skimming and zinc scallings arising during galvanisation are not excisable goods because excise applies only to articles produced by manufacture and known to the market as commodities. The Court reaffirmed that inclusion in a tariff entry does not by itself make waste or residue dutiable, and that mere sale value does not establish marketability. As these by-products do not become a new and distinct commercial product, they fail the manufacture-and-marketability test. The burden to prove excisability rests on the Revenue, and that burden was not discharged.

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Issues: Whether zinc dross, flux skimming and zinc scallings arising during galvanisation of steel sheets are excisable goods liable to central excise duty.

Analysis: The governing test is whether the article is the result of manufacture and is a commodity known to the market. The Court reaffirmed that excise is a duty on manufacture and that mere mention of an item in a tariff entry does not by itself make it excisable. Zinc dross and flux skimming arise as refuse or scum in the course of galvanisation, are not transformed into a new and distinct commercial product, and do not acquire the character of goods merely because they may fetch some sale value. The Court relied on earlier authority holding that similar dross, skimmings, waste and residues are neither marketable commodities nor excisable goods, and that the burden to establish manufacture and marketability lies on the Revenue.

Conclusion: Zinc dross, flux skimming and zinc scallings are not excisable goods and no central excise duty is leviable on them.

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