Marketability test governs excise levy: flares from duty-paid glass tubes were not shown to be commercially identifiable goods.

Flares made from duty-paid glass tubes were found not to be excisable because the department did not prove that they were marketable or capable of being marketed as a commercially identifiable commodity. The record showed no sale, clearance, or commercial recognition of the product as flares, and mere reliance on the fact that similar items were manufactured by others was insufficient. As marketability is a condition for central excise duty, the proposed classification under Tariff Item 23A(4) was rejected and the demand was set aside.

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Issues: Whether flares made out of duty-paid glass tubes were excisable and classifiable under Tariff Item 23A(4), or whether absence of marketability took them outside the levy.

Analysis: The item was produced from duty-paid tubes. The evidence on record showed that the product was not sold or cleared in the market as flares and was not shown to be commercially known or ordinarily bought and sold as such. Excisability depends on marketability, and the burden rests on the department to establish that the goods are marketable or capable of being marketed. Mere assertion that similar items are manufactured by others was held insufficient. In the absence of contrary evidence, the reasoning that a distinct excisable commodity had emerged was not accepted.

Conclusion: The flares were held not to be excisable, and the classification under Tariff Item 23A(4) was rejected in favour of the assessee.

Final Conclusion: The demand was set aside because the product was not shown to satisfy the marketability test for excise levy.

Ratio Decidendi: For central excise, a product is not liable to duty unless the department proves that it is marketable or capable of being marketed as a commercially identifiable commodity.

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