Manufacture and marketability are essential for excise duty; simple mixing of prepared dyes did not justify the demand.

Preparation of printing paste by simple mixing of duty-paid dyes and other materials was held not to amount to manufacture on the facts considered, so the excise demand could not be sustained. The Court noted the Board's clarification that printing paste made from formulated, standardised or prepared dyes by simple mixing would not fall under the relevant tariff entry, and placed the burden on the Revenue to prove manufacture. It also reaffirmed that marketability is an essential ingredient of excisability, and rejected the view that marketability was irrelevant. As those requirements were not established, the demand order was set aside and relief was granted to the assessee.

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Issues: Whether the preparation of printing paste by mixing duty-paid dyes and other materials amounted to manufacture and produced excisable goods liable to central excise duty, and whether marketability was required to sustain the demand.

Analysis: The demand notices proceeded on the premise that mixing the materials resulted in a new product classifiable under Chapter sub-heading 3204.29. The clarification issued by the Board stated that printing paste prepared from formulated, standardised or prepared dyes by simple mixing with other materials would not amount to manufacture and would not fall under that sub-heading. On the facts of the notices and the materials placed, the Revenue bore the burden of establishing that the printing paste was the result of manufacture. The Court also applied the settled principle that marketability is an essential ingredient for excisability, and the view taken in the impugned order that marketability was irrelevant could not be sustained.

Conclusion: The preparation of printing paste, on the footing accepted by the Court, did not amount to manufacture so as to justify the excise demand. The demand order was unsustainable and was set aside, with relief granted in favour of the assessee.

Ratio Decidendi: Where the Revenue asserts excisability, it must establish manufacture and marketability, and a product prepared by simple mixing of formulated or standardised materials is not dutiable unless those requirements are proved.

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