Marketability is essential for excise duty on intermediate chemicals; unproven commercial identity defeats tax liability.

Excise duty on intermediate chemicals arises only if the goods are shown to be marketable and known in the market as distinct commercial commodities; mere emergence during manufacture or inclusion in the tariff is insufficient. The Revenue bears the burden of proving marketability. On the facts, the evidence relied on, including a test report and an inference of stability, did not establish commercial identity or capability of being bought and sold. Internal consumption and conjecture about hypothetical sale could not prove marketability, and the letter relied on by the Tribunal stated that the intermediates were not marketable in India or abroad. The intermediates were therefore not liable to excise duty.

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Issues: Whether the intermediate chemicals DECA and CMBE, generated in the manufacture of Butachlor, were marketable goods liable to central excise duty.

Analysis: Excise duty on manufactured articles depends not merely on their emergence in the course of manufacture or their inclusion in the tariff, but on proof that they are marketable and known in the market as distinct commercial commodities. The burden to establish marketability lay on the Revenue. The evidence relied upon, consisting mainly of a test report describing the samples as organic chemicals and an inference of stability, did not establish that the products had commercial identity or were capable of being bought and sold in the market. The finding of marketability based on conjecture, hypothetical possibility of sale, and the fact of internal consumption was held to be insufficient. The letter relied on by the Tribunal did not support marketability and in fact stated that the intermediates were not marketable in India or abroad.

Conclusion: The intermediate chemicals were not proved to be marketable goods and were not liable to excise duty; the assessee succeeded.

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