Marketability is essential for excise duty; intermediate coated cloth used only in tape manufacture was not excisable goods.

Intermediate rolls of cloth with a release coating, produced only as a stage in making waterproof cloth adhesive tapes, were held not to be excisable goods because the unrebutted evidence showed they were not marketable and had no independent commercial use. In the absence of any contrary material from the department, the tribunal rejected the view that the product could be treated as goods for central excise purposes. As the product lacked marketability, it was not classifiable under the tariff entries invoked and no excise duty was attracted.

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Issues: Whether the rolls of cloth with release coating on one side, manufactured as an intermediate stage in the production of waterproof cloth adhesive tapes, were excisable goods and classifiable under Item 19-I(b) or Item 19-III of the First Schedule to the Central Excises and Salt Act, 1944.

Analysis: The intermediate rolls were supported by unrebutted expert affidavits and trade opinions showing that the release-coated cloth was not marketable as waterproof cloth, had no commercial use as such, and was only a stage in the continuous process of manufacturing adhesive tapes. The department produced no material to contradict that evidence. Since goods must ordinarily be capable of being brought to market to qualify as goods for excise purposes, and the Assistant Collector's conclusion rested on unsupported presumptions rather than evidence, the intermediate product could not be treated as excisable goods under the tariff items invoked.

Conclusion: The rolls of cloth were not excisable goods and were not classifiable under Item 19-I(b) or Item 19-III of the First Schedule to the Central Excises and Salt Act, 1944; the finding was in favour of the assessee.

Final Conclusion: The appeal failed because the disputed intermediate product lacked marketability and therefore did not attract central excise duty.

Ratio Decidendi: A product is not liable to excise duty unless it is a marketable good capable of ordinarily being bought and sold in the market.

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