Marketability controls excisability of scrap; burnt pot lining scrap was not taxable, and the duty demand failed.

Burnt pot lining scrap arising as rubbish in the course of manufacture was held not excisable because the Revenue failed to prove commercial marketability. The mere fact that the scrap had some sale value did not establish that it was known in the market as a raw material for cryolite or otherwise marketable. As marketability was not proved, the proposed classification under Tariff Heading 2804.90 and the consequential duty demand could not stand. The appeals succeeded and the assessee obtained consequential relief.

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Issues: Whether burnt pot lining scrap was excisable and classifiable under Tariff Heading 2804.90, and whether the duty demand consequential to that classification was sustainable.

Analysis: The product arose as rubbish in the course of manufacture. No reliable evidence was produced to show that it was known in the market as a raw material for cryolite or that it was otherwise marketable. The mere fact that the rubbish had some sale value did not by itself make it a marketable product. In the absence of proof of marketability, the provisions relied upon by the Revenue did not advance its case.

Conclusion: Burnt pot lining scrap was held not excisable, and the classification and consequential duty demand failed.

Final Conclusion: The appeals succeeded and the assessee obtained consequential relief.

Ratio Decidendi: A by-product or scrap is not excisable unless the Revenue establishes that it is marketable in the commercial sense; mere sale value or potential utility is insufficient.

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