Marketability as a condition precedent to excisability: crude sorbitol was treated as a non-marketable intermediate product.

Marketability is a condition precedent to excisability, and an intermediate product is liable to central excise only if it is capable of sale as a distinct and identifiable commodity. On the facts, crude sorbitol generated captively in the manufacture of ascorbic acid was treated as a transient, unstable intermediate with a short shelf life and no established market. Technical literature, expert affidavits and trade letters supported the assessee's case, while the department did not produce persuasive evidence that the product was actually marketable. The burden in a demand case lay on the department to prove marketability, and that burden was not discharged.

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Issues: Whether crude sorbitol arising captively in the manufacture of ascorbic acid was marketable and therefore excisable, and whether the department had discharged the burden of proving marketability.

Analysis: Marketability is a condition precedent for excisability. An article becomes goods for excise purposes only if it is capable of being sold in the market as a distinct and identifiable commodity. The assessee produced technical literature, expert affidavits, and trade letters showing that crude sorbitol was a transient, unstable intermediate with a short shelf life and no established market. The department relied mainly on the chemical examiner's report and tariff references, but led no persuasive evidence that crude sorbitol was actually capable of being bought and sold as such. The burden, in a demand case, lay on the department to establish marketability.

Conclusion: Crude sorbitol was held not to be marketable goods and, therefore, not liable to central excise duty. The issue was decided in favour of the assessee.

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