Marketability is essential for excisability; recovered caprolactum from waste was not dutiable without proof of marketability.

Recovered caprolactum obtained from waste in nylon yarn manufacture is not excisable unless it is shown to be marketable as goods. The text states that marketability is an essential condition for levy of excise duty, including where the item is captively consumed, and that mere emergence in the manufacturing process or inclusion in the tariff entry is insufficient. On the facts described, there was no evidence that the recovered caprolactum was sold or capable of being marketed in molten form, so it was treated as not liable to excise duty.

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Issues: Whether recovered caprolactum obtained from waste in the course of nylon yarn manufacture amounts to excisable goods liable to duty under Tariff Item No. 14-AA.

Analysis: The authorities below proceeded on the basis that a manufacturing process resulted in a separate product, but the decisive question was whether the recovered caprolactum was marketable. The record contained no evidence that the product was sold or capable of being marketed as such, while the assessee relied on evidence indicating that caprolactum in molten form was not marketable. Marketability is an essential condition for levy of excise duty, including where the item is captively consumed, and mere inclusion in the tariff entry or emergence in the manufacturing process is insufficient by itself.

Conclusion: The recovered caprolactum was not liable to excise duty, and the appeal was allowed in favour of the assessee.

Ratio Decidendi: Marketability is an essential ingredient of excisability, and a product is not dutiable merely because it emerges from manufacture or is specified in the tariff if it is not shown to be capable of being marketed as goods.

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