Marketable by-product doctrine brings fly ash within excise duty when it is sold and recognised in trade.

Fly ash generated during the burning of pulverised coal was treated as a by-product of manufacture, not as mere refuse. Because it was sold to consumer industries and had established commercial use, it was considered a marketable commodity known in trade. On that basis, the principle that waste or scrap incidentally arising in manufacture may still be excisable was applied, and fly ash was held liable to excise duty under Tariff Item 68.

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Issues: Whether fly ash generated during the burning of pulverised coal is liable to excise duty under Tariff Item 68.

Analysis: Fly ash was treated as a by-product arising in the course of manufacture, not as mere refuse. The fact that it was sold to consumer industries and had an established commercial use showed that it was a marketable commodity known in trade. In such circumstances, the principle that waste or scrap arising incidentally in the manufacturing process may still be excisable applied.

Conclusion: Fly ash was held liable to excise duty under Tariff Item 68, and the Department's appeal succeeded.

Ratio Decidendi: A product arising incidentally in the course of manufacture is excisable if it is a marketable commodity known in trade, even though it is also a waste or by-product.

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