Marketability test controls excise duty on intermediate goods not shown to be marketable or tariff-covered

For central excise, an intermediate product is dutiable only if it emerges as a marketable commodity known to the market and covered by the relevant tariff entry. Starch hydrolysate produced and captively used in sorbitol manufacture was found unstable, prone to fermentation, and materially different from commercial liquid glucose and glucose syrup in composition and stability. Because the Department did not prove that it was bought or sold in the market, it was neither marketable goods nor glucose or liquid glucose within the tariff description. No excise duty was leviable on the product, and the duty and penalty could not stand.

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Issues: Whether starch hydrolysate manufactured and captively consumed in the manufacture of sorbitol was marketable goods liable to central excise duty, and whether it could be treated as glucose or liquid glucose falling within the tariff entry.

Analysis: Excise duty is attracted only when manufacture results in emergence of goods known to the market and capable of being bought and sold. The Department failed to establish that starch hydrolysate was marketed by anyone or was marketable at all. The evidence showed that the product was unstable, fermented quickly, and differed materially from commercial liquid glucose and glucose syrup in composition, solids content, dextrins, and stability. The tariff entry covered glucose in whatever form including liquid glucose, but the product in question was neither dextrose in its recognised forms nor liquid glucose as commercially understood.

Conclusion: Starch hydrolysate was not marketable goods and did not fall within the tariff description of glucose or liquid glucose; no excise duty was leviable on it.

Final Conclusion: The demand of duty and penalty could not stand because the intermediate product was not shown to be excisable goods.

Ratio Decidendi: For central excise, an intermediate product is dutiable only if the Department proves that it is marketable as a distinct commodity known to the market and covered by the relevant tariff entry.

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