Captive-use co-polymer beads can still be excisable goods; tariff classification needs proof, and limitation was confined to the normal period.

Co-polymer beads made for captive use were treated as excisable goods because they emerged as a distinct, storable product with recognised uses, and absence of open-market sale did not negate duty liability. Classification under Tariff Item 15A(1)(ii) was not finally proved, since co-polymerisation alone did not establish that the beads were resinous or plastic in character; that issue required fresh factual determination. The duty demand was also confined to the normal six-month period under Section 11A, as the facts had been disclosed and no suppression or misstatement to evade duty was shown.

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Issues: (i) whether co-polymer beads manufactured for captive use were goods exigible to excise duty; (ii) whether the beads were classifiable under Tariff Item 15A(1)(ii); and (iii) whether the demand was barred by limitation.

Issue (i): whether co-polymer beads manufactured for captive use were goods exigible to excise duty.

Analysis: The beads emerged as a distinct product in the course of manufacture, were capable of storage, and were recognised in chemical technology as a standard product with potential uses. Specialised or captive-use character did not by itself negate excisability. The absence of sale in the open market was therefore not decisive.

Conclusion: The beads were goods and were exigible to excise duty.

Issue (ii): whether the beads were classifiable under Tariff Item 15A(1)(ii).

Analysis: Tariff Item 15A(1)(ii) covered artificial or synthetic resins and plastic materials, including polymerisation and co-polymerisation products, but the mere fact that a product was co-polymerised did not by itself establish that it was resinous or plastic in character. The available material did not conclusively show that the beads answered that description, and the product required testing and factual determination on its resinous or plastic nature.

Conclusion: The classification under Tariff Item 15A(1)(ii) was not finally established and the matter was remanded for de novo decision on that aspect.

Issue (iii): whether the demand was barred by limitation.

Analysis: The demand for duty on the beads had to be raised under Section 11A of the Central Excises and Salt Act, 1944, because it concerned a separate excisable product and could not be recovered merely on the basis of the earlier appellate order relating to the final product. As the facts had been disclosed and no suppression or misstatement to evade duty was shown, the longer period was unavailable.

Conclusion: The demand was recoverable only for six months preceding the show cause notice.

Final Conclusion: The appeal succeeded in part: the beads were held dutiable, the limitation plea was accepted to the extent that only the normal period could be recovered, and the classification question was sent back for fresh determination.

Ratio Decidendi: A captive-use product may still be excisable if it is a distinct and marketable commodity, but tariff classification must rest on proof that the goods answer the statutory description, and a duty demand for a separate product can be made only within the period permitted by Section 11A absent suppression or misstatement.

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