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Issues: (i) Whether the intermediate product emerging in the course of manufacture was covered by Item 15A as an artificial resin or other high polymer under Explanation II; (ii) Whether the intermediate product was marketable and therefore excisable goods.
Issue (i): Whether the intermediate product emerging in the course of manufacture was covered by Item 15A as an artificial resin or other high polymer under Explanation II.
Analysis: The product obtained in the intermediate stage was found to be a polycondensation product, but the enquiry under Explanation II had to proceed further to determine whether it answered the description of artificial resin. On the expert evidence, the substance was a brown viscous sticky mass, not resin as known to chemistry, trade, or the market, and resin could not be separated except by further elaborate processing. The contrary view was not supported by material. The expression "artificial resin" was treated as a trade and market expression, and on that test the intermediate product did not fall within Item 15A.
Conclusion: The intermediate product was not covered by Item 15A and was not liable to duty under that entry.
Issue (ii): Whether the intermediate product was marketable and therefore excisable goods.
Analysis: Marketability is an essential ingredient of excisable goods. The unrebutted expert evidence, supported by traders' affidavits, showed that the sticky mass was not sold or known in the market as resin, could not be used as such, and required further elaborate processing before any possible use. The finding of marketability recorded by the department rested on assumptions rather than evidence. On the material before it, the product was not shown to be a saleable commodity in the commercial sense.
Conclusion: The intermediate product was not marketable and therefore was not excisable goods.
Final Conclusion: The demand of duty on the intermediate product could not be sustained, as the product did not answer the tariff description and lacked the essential attribute of marketability.
Ratio Decidendi: An intermediate product is dutiable only if it answers the tariff description in trade and market parlance and is marketable as a saleable commodity; a chemically identifiable substance that requires further elaborate processing and is not known or saleable in the market is not excisable goods.
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