Marketability test governs excise duty on treated water, and mere purification without distinct marketable identity is insufficient.

Treated water cleared to vending machine outlets was held not marketable as a distinct commodity, so the deeming provision in Chapter 22 could not treat the purification process as manufacture for central excise purposes. The department had not shown by evidence that the water was sold to consumers or otherwise marketed, and the purification and filtration merely improved quality without changing the nature or composition of the water. The reference to canisters bearing the name "cococola" was treated as a house mark for identification and did not make the water marketable under that brand. As the duty demand failed, the consequential interest and penalties were also unsustainable.

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Issues: Whether treated water cleared to vending machine outlets was marketable and liable to central excise duty under the deeming provision in Chapter 22, and whether duty, interest and penalties were sustainable.

Analysis: The decisive test was marketability. The department did not establish by enquiry or evidence that the treated water was sold to consumers or otherwise marketed as a distinct commodity. The processes of purification and filtration only improved the quality of water and did not change its nature or composition. The deeming provision in Note 2 to Chapter 22 applied only where the specified processes rendered the product marketable to the consumer, and that condition was not satisfied on the facts. The reference to canisters bearing the name "cococola" did not alter the position, as the mark was treated as a house mark used for identification and the water itself was not marketed under that brand. Since the duty demand failed, the consequential penalties also could not survive.

Conclusion: The treated water was not exigible to central excise duty, and the demand and penalties were unsustainable.

Ratio Decidendi: A deeming provision treating a process as manufacture applies only when the department proves that the processed goods have become marketable to the consumer as a distinct commodity; mere purification that leaves the product as water does not satisfy that test.

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