Marketability test for excise: sugar syrup used in sweetmeats was not a distinct commodity and attracted no duty.

Sugar syrup (chasni) used only as a preservative in the manufacture of sweetmeats was not excisable goods because central excise liability under Section 3 arises only where the product is "goods" within Section 2(d), meaning it must be marketable and capable of being bought and sold as a distinct commodity. On the stated facts, the syrup did not emerge as a separate commercially identifiable product, was not shown to be traded in that form, and therefore failed the marketability test. The result was that no central excise duty could be levied on the syrup, and the related demand and penalties were unsustainable.

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Issues: Whether sugar syrup (chasni) used as a preservative in the manufacture of sweetmeats, and not sold as a distinct product, is excisable goods liable to central excise duty.

Analysis: Liability under Section 3 of the Central Excise Act, 1944 arises only for excisable goods, and Section 2(d) of that Act treats goods as excisable only if they are capable of being bought and sold for consideration and are therefore marketable. On the facts, the sugar syrup was used only as an ingredient or preservative in the finished sweetmeats, which alone were known and sold in trade. The syrup did not emerge as a distinct commercially identifiable product in the condition in which it was manufactured, nor was there material to show that it was traded as such. The essential test of marketability was therefore not satisfied.

Conclusion: Sugar syrup (chasni) was not excisable goods and no central excise duty could be fastened on it; the demand and consequential penalties were unsustainable.

Ratio Decidendi: An intermediate product is not liable to central excise duty unless it is shown to be marketable as a distinct and identifiable commodity in the form in which it emerges from manufacture.

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