Marketability of intermediate product fails where no real market enquiry supports duty on wheat flour sheet

Wheat flour sheet used as an intermediate product in chocolate manufacture was not shown to be marketable, so duty could not be sustained on that basis. The marketability finding rested on an asserted market enquiry and comparison with other products, but the Commissioner's report recorded that no formal market enquiry had been conducted and that the alleged comparable product was not shown to exist. It was also noted that the assessee was no longer manufacturing the product, removing the factual foundation for treating it as marketable.

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Issues: Whether the intermediate product, namely wheat flour sheet used in the manufacture of chocolates, was marketable and therefore dutiable.

Analysis: The finding of marketability in the impugned order was based on a market enquiry and comparison with other products said to be sold in the market. The Commissioner's report, however, stated that no formal market enquiry had in fact been conducted and that the comparative product referred to in the order was not shown to exist. It also noted that the assessee was no longer manufacturing the product. The factual foundation for treating the product as marketable was therefore removed.

Conclusion: The intermediate product was not shown to be marketable, and the order confirming duty on that basis could not be sustained.

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