Marketable by-products with separate identity are excisable goods under Tariff Item 68, despite being described as waste.

A substance emerging during manufacture is excisable when it acquires a separate identity, distinct physical and chemical characteristics, and marketability. Beta Naphthol Tar and Bon Acid Tar were commercially known and regularly sold over a substantial period, showing they were distinct commodities rather than mere waste or scrap. Their description as by-products or waste by the manufacturer did not prevent excisability once trade and market evidence established commercial value. They were accordingly classified as excisable goods under Tariff Item 68, and the duty demand was sustained in favour of Revenue.

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Issues: Whether Beta Naphthol Tar and Bon Acid Tar, arising in the course of manufacture of Beta Naphthol and Bon Acid, were excisable goods classifiable under Tariff Item 68 or were merely waste and scrap not liable to excise duty.

Analysis: The disputed materials were found to have a separate identity and distinct physical and chemical characteristics. They were commercially known as Beta Naphthol Tar and Bon Acid Tar, and the record showed regular sales over a substantial period, establishing that they were marketable commodities and not stray disposals of useless residue. The assessee's own reply described the products as Beta Naphthol Tar and Bon Acid Tar, reinforcing their identity in trade. The fact that they arose as by-products or were described as waste from the manufacturer's perspective did not negate excisability once they had acquired the character of distinct goods with commercial value.

Conclusion: The products were held to be excisable goods falling under Tariff Item 68 of the Schedule to the Central Excise Tariff, and the duty demand was sustained. The finding was in favour of Revenue.

Ratio Decidendi: A substance emerging in the course of manufacture is excisable if it has acquired separate identity, is known in the market as a distinct commodity, and is regularly bought and sold for commercial value, regardless of whether it is described as a by-product or waste.

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