Marketability as a condition for excise duty: Revenue failed to prove the semi-wet intermediate product was dutiable.

Intermediate goods at the semi-wet stage were not chargeable to central excise duty because marketability is a condition precedent to exigibility and the burden rests on the Revenue to prove that the goods are capable of being bought and sold in the market. Here, the department produced no evidence of marketability, while the assessee filed an affidavit stating the product was not marketable at that stage. On that footing, the product was treated as not excisable and the demand and penalty could not survive.

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Issues: Whether the intermediate product at the semi-wet stage was marketable and therefore excisable.

Analysis: The dispute turned on whether the Revenue had proved that the goods, at the stage at which duty was sought to be levied, were capable of being bought and sold in the market. The record showed no evidence from the department establishing marketability, while the assessee produced an affidavit stating that the product at that stage was not marketable. In such circumstances, and applying the settled principle that marketability is a condition precedent for exigibility and that the burden lies on the Revenue, the product could not be treated as dutiable.

Conclusion: The product was held to be not marketable and hence not excisable, so the demand and penalty could not survive.

Ratio Decidendi: Goods are not chargeable to central excise duty unless the Revenue proves that the goods are marketable.

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