Marketability test in excise law excludes non-marketable intermediate components from duty, though dissent favoured excisability.

Plastic shells made as intermediate components for luggage manufacture were analysed under the excise test of marketability. The majority view applied the settled principle that excise duty arises only where manufacture results in goods capable of being brought to market for sale; on the facts, the shells were supplied by the user company, returned for further use, not shown to be bought and sold, and required further manipulation before becoming part of finished luggage, so they were treated as non-marketable and not excisable. A dissenting opinion considered the shells ready-to-use commercial components and therefore excisable even without proof of open-market sale.

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Issues: Whether plastic shells manufactured as intermediate components for luggage manufacture were 'goods' and hence excisable under Section 3 of the Central Excises and Salt Act, 1944.

Analysis: The majority held that the shells were manufactured from raw materials supplied by the user company and were returned for further use in luggage manufacture. On the facts, they were not shown to be bought and sold in the market. Applying the settled test that goods for excise must be marketable and capable of being brought to the market for sale, the majority distinguished authorities dealing with semi-finished or unfinished articles and treated the shells as analogous to non-marketable intermediate products. The majority also noted that the shells required further manipulation before becoming part of the finished luggage and that the mere fact of job-work manufacture did not by itself attract duty.

Conclusion: The shells were not goods liable to excise duty and the Revenue appeals were dismissed.

Final Conclusion: The decisive rule applied by the majority was that excise is attracted only when manufacture results in marketable goods capable of sale; a merely intermediate or unfinished article not ordinarily brought to market does not satisfy that requirement.

Dissenting Opinion: V.P. Gulati, Member (Technical), disagreed and held that the shells were ready-to-use component parts manufactured on a regular commercial basis, that actual sale in the open market was not essential, and that the articles were excisable. On that view, the Revenue appeal ought to have been allowed.

Ratio Decidendi: For excise purposes, an article becomes 'goods' only if it is marketable and capable of being brought to the market for sale; a merely intermediate component not so marketable is not excisable.

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