Marketability test for excise: milk crumb, as an intermediate product, was not proved marketable and was not taxable.

Marketability is the test for excise: an intermediate product is taxable only if it can ordinarily be bought and sold in the market. The Department bears the burden of proving such marketability, and mere physical movement between units does not establish that the product is goods. On the record, there was no adequate material showing that milk crumb was commercially marketable. It was treated as an in-process intermediate in milk chocolate manufacture, so it was not proved to be marketable goods and was not exigible under Tariff Item No. 68.

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Issues: Whether milk crumb, an intermediate product in the manufacture of milk chocolate, was marketable goods and therefore excisable under Tariff Item No. 68.

Analysis: The decisive test applied was marketability, since excise attaches only to articles that can ordinarily come to the market to be bought and sold. The Department bore the burden of proving that the product was marketable. The record showed no adequate material to establish that milk crumb was bought and sold in the market, and the physical movement of the product between units did not by itself make it goods or prove marketability. The product was treated as an intermediate, in-process material, and the absence of convincing evidence of commercial marketability required the assessee to succeed.

Conclusion: Milk crumb was not proved to be marketable goods and was not exigible under Tariff Item No. 68; the finding was in favour of the assessee and against the Revenue.

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