Marketability and limitation principles sustained excise duty on intermediate product, with abatement applied and penalty reduced.

Limitation could not be raised in second appeal where the adjudication finding of wilful suppression was not challenged below, so the demand was not treated as time-barred and the extended period remained available. Lay Flat Tubing was held marketable because actual sale is unnecessary; capability of being marketed is enough, and captive consumption did not by itself negate excisability. Duty, however, had to be recomputed after giving the abatement already contemplated in the notice for cutting, printing and packing charges, and the penalty was upheld in principle but reduced on the facts.

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Issues: (i) whether the demand of duty was barred by limitation and the extended period could be invoked; (ii) whether Lay Flat Tubing was marketable and therefore excisable; (iii) whether duty had to be recomputed after allowing abatement and whether the penalty required modification.

Issue (i): whether the demand of duty was barred by limitation and the extended period could be invoked.

Analysis: The finding of wilful suppression recorded in the adjudication order was not challenged before the lower appellate authority, and the plea of limitation was therefore not available at the second appeal stage. The challenge based on limitation was rejected.

Conclusion: The demand was not held to be time-barred, and the extended period remained available to the department.

Issue (ii): whether Lay Flat Tubing was marketable and therefore excisable.

Analysis: Marketability does not require actual sale in the market; capability of being marketed is sufficient. On the record there was no material to show that the intermediate product could not be marketed, nor any basis to accept the plea that it lacked marketability merely because it was captively consumed.

Conclusion: Lay Flat Tubing was held to be marketable and liable to excise duty.

Issue (iii): whether duty had to be recomputed after allowing abatement and whether the penalty required modification.

Analysis: The duty could not be confirmed on the full value because the show cause notice itself allowed abatement for cutting, printing and packing charges. The penalty was also sustainable, but the facts justified reduction of the quantum.

Conclusion: Duty was to be calculated after allowing the abatement of 14.87 per cent, and the penalty was reduced to Rs. 10,000.

Final Conclusion: The liability to duty was sustained, but only after the permitted abatement, and the penalty was substantially reduced.

Ratio Decidendi: An intermediate product is excisable if it is capable of being marketed, limitation cannot be raised for the first time in second appeal after an unchallenged finding of suppression, and penalty may be reduced on the facts even where duty liability is upheld.

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