Marketability of goods at removal stage governs excise liability; unmarketable pre-processing goods escape duty.

Marketability is an essential attribute of excisable goods, and where goods are removed at a pre-latexing stage for further processing and are not known or recognised in the market in that condition, central excise duty does not arise. The finding that the goods were not marketable as felt at the time of clearance was supported by technical and commercial evidence, and the Revenue produced no material to displace it. The goods were therefore not liable to Central Excise duty, and the Revenue's appeals failed.

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Issues: Whether the impugned goods, cleared at the pre-latexing stage under Rule 56B, were marketable as goods and therefore liable to Central Excise duty.

Analysis: Marketability is an essential attribute of excisable goods. The impugned order had found that the goods were not known or recognised as felt in the condition in which they were removed, and that finding was supported by technical evidence from IIT and commercial evidence from traders. The Revenue did not adduce any material to controvert the finding that the goods, at the stage of removal for further processing, were not marketable as felt. Where the product is not marketable at the stage of removal, classification and assessment to duty do not arise.

Conclusion: The goods were not marketable at the stage of clearance and were therefore not liable to Central Excise duty; the Revenue's appeals fail.

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