Marketability and limitation in excise: actual sale evidence proved dutiability, but full disclosure defeated the extended demand period.

Marketability of carb-liquor was established by evidence of an actual sale, approval of the price list, and correspondence showing an intention to sell, so the product was held marketable and excisable under the Central Excise Tariff. The demand was held time barred because the department already knew of manufacture and captive consumption from earlier correspondence, the RG 1 register, and RT-12 returns, leaving no basis for alleging suppression or misstatement to invoke the extended limitation period. Once limitation failed, the personal penalty was also set aside.

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Issues: (i) whether carb-liquor was marketable and therefore excisable; (ii) whether the demand was barred by limitation; (iii) whether the penalty was sustainable.

Issue (i): whether carb-liquor was marketable and therefore excisable

Analysis: Marketability depends on the capability of an article being sold, not on the extent of actual sales or its general availability in the market. The record showed an actual sale of carb-liquor, approval of the price list, and the appellant's own correspondence indicating an intention to sell the product. That evidence was sufficient to establish marketability notwithstanding the appellant's contention that the product was unstable and only incidentally sold in small quantity.

Conclusion: Carb-liquor was marketable and hence excisable under Tariff Heading 2836.90 of the Central Excise Tariff Act, 1985.

Issue (ii): whether the demand was barred by limitation

Analysis: The department had knowledge of the manufacture and captive consumption of carb-liquor from the appellant's earlier letter, the RG 1 register, and the RT-12 returns, which disclosed the relevant quantities and their use in ammonium sulphate fertilizer production. In these circumstances, no suppression or misstatement could be attributed to the appellant so as to justify the extended period.

Conclusion: The demand was time barred.

Issue (iii): whether the penalty was sustainable

Analysis: Once the demand was held to be barred by limitation, there was no basis for sustaining the personal penalty.

Conclusion: The penalty was not sustainable and was set aside.

Final Conclusion: The appeal succeeded on limitation, resulting in annulment of the duty demand and removal of the penalty, although the product was held to be dutiable on merits.

Ratio Decidendi: Actual sale and a demonstrated ability to be sold are sufficient to establish marketability, and limitation cannot be extended where the department already knew the material facts and no suppression is shown.

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