Dissolved hydroxide electrolyte is not manufacture or excisable goods absent a distinct commercial product and proven marketability.

A liquid electrolyte produced by dissolving or mixing solid potassium hydroxide and lithium hydroxide with water was held not to amount to manufacture of a distinct excisable commodity because it remained only the inputs in dissolved form for battery use, without a new name, character or use. Marketability was also not proved, and the inference drawn from inclusion of the electrolyte's cost in battery valuation was insufficient. Applying the settled test that mere change in form or preparation for usability does not create excisable goods, the duty demand and penalty were found unsustainable.

---

---

Issues: Whether liquid electrolyte obtained by mixing solid potassium hydroxide and lithium hydroxide with water amounts to manufacture of a distinct excisable commodity and is marketable so as to attract duty.

Analysis: The mixture was found to be only the solid hydroxides in dissolved form, used as electrolytes for battery purposes, and not a new commodity with a different name, character, or use. The finding of excisability in the adjudication order rested substantially on admissions in statements, without independent reasoning showing manufacture. The Revenue also failed to establish marketability, and the inference of marketability from inclusion of cost in the value of batteries was held insufficient. Applying the settled test that mere change in form or preparation for usability does not amount to manufacture when no distinct commercial product emerges, the product was held not exigible to duty.

Conclusion: The liquid electrolyte is not excisable, the duty demand and penalty were unsustainable, and the appeal succeeded.

Final Conclusion: The impugned order was set aside and no duty or penalty survived against the assessee.

Ratio Decidendi: A solution obtained by merely dissolving or mixing duty-paid inputs with water does not amount to manufacture unless it results in a distinct commercial commodity with a different name, character, use, and marketability.

---