Captive intermediate product not dutiable without proof of marketability; limitation objection also failed on the notice timeline.

An intermediate product captively consumed in a continuous manufacturing process is not liable to excise duty unless the Revenue proves that it is marketable and otherwise dutiable in law; here, no evidence of marketability was placed on record, so the burden was not discharged and dutiability was rejected. A limitation objection based on the later notice issued in de novo proceedings also failed because it traced back to the earlier notice covering the relevant period, so the demand was held to be in time.

---

---

Issues: (i) whether the intermediate product known as filter cake was dutiable as aluminium paste in the absence of proof of marketability and in view of captive consumption in the continuous manufacture of pyro-technic aluminium powder; (ii) whether the demand was barred by time.

Issue (i): whether the intermediate product known as filter cake was dutiable as aluminium paste in the absence of proof of marketability and in view of captive consumption in the continuous manufacture of pyro-technic aluminium powder

Analysis: The product emerged in a continuous manufacturing process and was admittedly captively consumed by the assessee. The Department did not place any evidence of marketability on record. The authority below relied on its own observations and did not properly address the assessee's contention that the product was only an intermediate stage product and not a marketable commodity. In such circumstances, the burden resting on the Revenue was not discharged.

Conclusion: The product was not shown to be dutiable on the facts established, and the issue is decided in favour of the assessee.

Issue (ii): whether the demand was barred by time

Analysis: The later notice issued pursuant to the de novo proceedings traced back to the earlier notice covering the relevant period. On that basis, the demand for the period in question was held to be within time.

Conclusion: The limitation objection fails and is decided against the assessee.

Final Conclusion: The appeal succeeds overall because the Revenue failed to establish dutiability of the intermediate product, even though the limitation objection was rejected.

Ratio Decidendi: An intermediate product captively consumed in a continuous manufacturing process is not liable to excise duty unless the Revenue establishes that it is marketable and otherwise dutiable in law.

---