Marketability controls excisability of intermediate product; loosely assembled punched web was not proved liable to duty.

First punched web produced in the manufacture of jute floor coverings was held not to be excisable goods because the Revenue failed to prove marketability. The product was described as a loosely assembled mass of polypropylene fibres with minimal cohesion, easily disintegrated, and lacking chemicals or adhesives, unlike the compact felt described in the HSN Explanatory Notes. The earlier needle loom felt decision was distinguished because it concerned a different stage of manufacture and did not address marketability. Applying the principle that an intermediate product is excisable only if marketable, the authority held that duty was not payable and rejected the Revenue's appeal.

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Issues: Whether the first punched web produced in the manufacture of jute floor coverings was excisable goods and, in particular, whether the Revenue had established its marketability.

Analysis: The product was found to be a loosely assembled mass of polypropylene fibres with minimal cohesion, capable of being easily disintegrated, and without the use of chemicals or adhesives. The characteristics were held to be different from felt as described in the HSN Explanatory Notes, which refer to a more compact product obtained by pressure, rubbing or beating and difficult to disintegrate. The Revenue produced no material to show that the first punched web was marketable. The reliance on the earlier decision concerning needle loom felt was rejected because that case involved a different stage of manufacture and did not consider marketability. The authority applied the principle that excisability of an intermediate product depends on proof of marketability.

Conclusion: The first punched web was not proved to be marketable and was not liable to duty as excisable goods. The Revenue's appeal was therefore rejected.

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