Marketability and strict exemption compliance govern excise treatment of jigs and fixtures, with extended limitation upheld.

Jigs and fixtures are treated as excisable goods if they are capable of sale, even where manufactured to specification and used for internal operations; actual sale is unnecessary. Exemption under Notification No. 220/86-C.E. applies only where the goods are manufactured in a factory and intended for use in that same factory, so removal to job workers defeats the condition and strict compliance is required. For limitation, mere filing of a licence application did not amount to full disclosure of manufacture and clearance, and the absence of classification lists and statutory records justified the extended period; the penalty was reduced only in quantum.

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Issues: (i) whether jigs and fixtures manufactured by the assessee were excisable goods on the test of marketability; (ii) whether exemption under Notification No. 220/86-C.E. was available when the goods were cleared outside the factory after some use; and (iii) whether the extended period of limitation and penalty were correctly invoked.

Issue (i): whether jigs and fixtures manufactured by the assessee were excisable goods on the test of marketability.

Analysis: The assessee's contention that the goods were made to specification and used only for its own manufacturing operations did not negate marketability. The fact that the goods were cleared to job workers showed that they were capable of being brought to market. The governing principle applied was that marketability means capability of sale, and actual sale is not necessary to attract excise duty.

Conclusion: The jigs and fixtures were excisable goods and the finding was against the assessee.

Issue (ii): whether exemption under Notification No. 220/86-C.E. was available when the goods were cleared outside the factory after some use.

Analysis: The notification granted exemption only to jigs and fixtures manufactured in a factory and intended for use in the factory in which they were manufactured. Since the goods were removed outside the factory for use by job workers, the substantive condition of in-factory use was not satisfied. The condition was treated as mandatory and not merely procedural, and exemption notifications were construed strictly.

Conclusion: The exemption was not available and the finding was against the assessee.

Issue (iii): whether the extended period of limitation and penalty were correctly invoked.

Analysis: Mere filing of an application for a licence did not amount to disclosure of manufacture and clearance. No satisfactory evidence was produced to show disclosure of the impugned manufacture, and the absence of classification lists, statutory records, and proper intimation justified invocation of the larger period. The penalty was, however, reduced in quantum.

Conclusion: The extended period was validly invoked and the penalty was modified only in amount, against the assessee on the jurisdictional point.

Final Conclusion: The appeal failed on the substantive tax liability and limitation issues, with only a reduction in the penalty amount.

Ratio Decidendi: Goods are exigible if they are marketable in the sense of being capable of sale, actual sale is unnecessary, and an exemption notification conditioned on in-factory use must be strictly complied with as a substantive requirement.

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