Marketability and recycling under excise exemption led to caprolactum recovery being treated as non-excisable.

Caprolactum recovered from nylon polymer waste by depolymerisation was treated as recycling covered by the relevant excise exemption notifications. The Tribunal applied the settled principle that marketability is a prerequisite for excisability and found that the Department had not shown the recovered caprolactum, in molten form, was sold or otherwise marketable as such. On that basis, the recovered product was held entitled to exemption and not excisable on the Department's case.

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Issues: Whether caprolactum recovered from nylon polymer waste by depolymerisation was entitled to exemption under the relevant excise notifications, and whether the recovered product was excisable in the absence of proof of marketability.

Analysis: The decisive question was whether the recovery process amounted to recycling within the scope of the exemption notifications. The Tribunal applied the settled test that marketability is essential for excisability. On the material before it, the Department had not established that caprolactum recovered in molten form was sold or marketable as such. The reasoning also treated the depolymerisation process as falling within recycling for the purpose of the notifications.

Conclusion: The recovered caprolactum was held entitled to the benefit of the exemption notifications and was not treated as excisable on the footing advanced by the Department.

Final Conclusion: The demand and penalty were set aside and the appeal succeeded with consequential relief.

Ratio Decidendi: For excise duty to be leviable, marketability must be shown, and caprolactum recovered from nylon polymer waste by depolymerisation was treated as recycling covered by the exemption notifications.

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