Captive consumption of finished calcium carbide remained excisable; packing rules for sale did not exclude central excise duty.

Calcium carbide emerging in finished form after manufacture and sieving was treated as excisable goods under Item 14AA even when captively consumed in producing acetylene black. The fact that some quantity was sold and some used internally did not alter its character, because the product was commercially identifiable at the stage duty was attracted. The packing requirement under the Carbide of Calcium Rules, 1937 applied to goods intended for sale and did not exempt captive use from excisability. Rules 9 and 49, as amended, also supported levy on intermediate goods consumed within an integrated manufacturing process.

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Issues: (i) Whether calcium carbide captively consumed in the manufacture of acetylene black, after sieving and without further processing, was marketable goods liable to central excise duty under Item 14AA of the Central Excise Tariff. (ii) Whether the packing requirement under the Carbide of Calcium Rules, 1937, excluded captively consumed calcium carbide from excisability.

Issue (i): Whether calcium carbide captively consumed in the manufacture of acetylene black, after sieving and without further processing, was marketable goods liable to central excise duty under Item 14AA of the Central Excise Tariff.

Analysis: The product emerged in finished form after the manufacture and sieving stage. Item 14AA specifically covered calcium carbide, and the fact that some quantity was sold while some was used captively did not alter its character as excisable goods. The earlier view that an intermediate product must be marketable in the sense of being actually sold was distinguished, because here the article was complete and commercially identifiable at the stage at which duty was attracted. The later Supreme Court decision on intermediate products manufactured in an unfinished state did not assist the assessee on these facts.

Conclusion: The issue was decided against the assessee and in favour of the Revenue; captively consumed calcium carbide was held liable to excise duty under Item 14AA.

Issue (ii): Whether the packing requirement under the Carbide of Calcium Rules, 1937, excluded captively consumed calcium carbide from excisability.

Analysis: The packing requirement governed goods intended for sale in the market and did not create a condition that captively consumed calcium carbide must also be packed in air-tight drums before it could be treated as goods. The absence of packing for captive use did not destroy marketability or the incidence of manufacture for excise purposes. Rules 9 and 49, as amended, also supported levy on goods produced in an integrated manufacturing process and consumed at an intermediate stage.

Conclusion: The issue was decided against the assessee and in favour of the Revenue; the packing rules did not exempt the captively consumed calcium carbide.

Final Conclusion: The appeal failed, and the order sustaining excise duty on captively consumed calcium carbide was maintained.

Ratio Decidendi: Goods that emerge in finished form and are specifically covered by the tariff are liable to excise duty even when consumed captively in further manufacture, and marketability is not negated merely because packing requirements apply to goods intended for sale.

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