Marketability of resin coated sand and captive-use exemption shape duty treatment for intermediate goods under excise notification

Marketability of resin coated sand must be shown by evidence; non-satisfaction of a stick point test, treated only as a quality-control measure, did not by itself disprove marketability, so the sand was treated as excisable. Captively consumed resin coated sand used to make sand moulds and cores for dutiable aluminium castings satisfied the conditions of Notification No. 217/86-C.E., so the intermediate product was exempt from duty. The stated ratio is that marketability cannot be negatived merely by reference to a quality-control test, and captive intermediate goods used in the manufacture of dutiable final products may qualify for notification-based exemption.

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Issues: (i) Whether resin coated sand manufactured by the appellants was marketable and therefore dutiable. (ii) Whether resin coated sand used captively in the manufacture of sand moulds and cores for producing dutiable aluminium castings was entitled to exemption under Notification No. 217/86-C.E.

Issue (i): Whether resin coated sand manufactured by the appellants was marketable and therefore dutiable.

Analysis: The claimed absence of marketability was founded on non-satisfaction of the stick point test. That test was treated only as a quality control tool and not as the test of marketability. In the absence of evidence showing that the product was not marketable, the manufactured resin coated sand was treated as excisable.

Conclusion: The resin coated sand manufactured by the appellants was dutiable.

Issue (ii): Whether resin coated sand used captively in the manufacture of sand moulds and cores for producing dutiable aluminium castings was entitled to exemption under Notification No. 217/86-C.E.

Analysis: The resin coated sand was an intermediate product consumed within the factory for making sand moulds and cores, which in turn were used in the manufacture of dutiable aluminium castings. On that basis, the captively consumed product satisfied the exemption condition relied upon by the appellants.

Conclusion: The captively used resin coated sand was exempt from duty under Notification No. 217/86-C.E.

Final Conclusion: The product was held dutiable on the question of marketability, but the appeal succeeded because the captively consumed intermediate product qualified for exemption, resulting in no duty liability in the appellants' case.

Ratio Decidendi: Marketability must be established on evidence and cannot be negatived merely by non-satisfaction of a quality-control test, while captively consumed intermediate goods used in the manufacture of dutiable final products may qualify for exemption under the relevant notification.

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