Marketability test for excise duty: unstable captive synthetic resins were not excisable despite fitting tariff wording.

Intermediate synthetic resins used captively in laminated sheet manufacture were held not to be excisable goods because marketability is a necessary condition for excise duty. Although phenol formaldehyde and melamine formaldehyde may fall within the tariff wording, the resin was found to be unstable and non-marketable, and that factual position was not rebutted. The tariff entry alone was therefore insufficient to attract duty. The products were not classifiable under Tariff Item 15A(1), and the issue was decided in favour of the assessee.

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Issues: Whether phenol formaldehyde and melamine formaldehyde, being intermediate synthetic resins manufactured and used captively in the production of laminated sheets, were excisable goods and classifiable under Tariff Item 15A(1).

Analysis: The governing principle applied was that even where a product answers the tariff description, duty can be levied only if it is marketable and therefore goods within the meaning of excise law. The intermediate resin produced in the course of manufacture was found to be unstable and non-marketable, and the Department did not rebut that factual position. Following the Supreme Court ruling that resol or A-stage synthetic resin is not dutiable unless marketability is shown, the tariff entry by itself was held insufficient to attract duty.

Conclusion: The products were not excisable goods and were not classifiable under Tariff Item 15A(1), so the issue was decided in favour of the assessee.

Ratio Decidendi: Marketability is a necessary condition for excisability, and an intermediate product that is unstable and not marketable is not liable to excise duty even if it falls within the wording of the tariff entry.

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