Intermediate product duty fails where no distinct, marketable commodity emerges before needle punching in the manufacturing process.

No manufacture of wadding arose before the needle-punching stage in the described process, because layering polyester fibres on grey fabric did not produce a distinct or marketable intermediate commodity. Duty liability on an intermediate stage could not be imposed unless the process resulted in manufacture of a separately identifiable product. The Revenue's challenge therefore failed, and the assessee's position was sustained.

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Issues: Whether, on the facts of the manufacturing process described, a stage of manufacture of wadding arose before needle punching so as to attract duty liability on the intermediate product.

Analysis: The process disclosed placement of polyester fibres in layers on grey fabric followed by needle punching to produce felt. The Tribunal found that this did not amount to manufacture of wadding at the pre-needle-punching stage, and that the goods at that stage were neither fully formed nor marketable as a distinct commodity.

Conclusion: No manufacture of wadding took place before needle punching, and duty was not leviable at that stage.

Final Conclusion: The Revenue's challenge failed and the assessee's position was sustained.

Ratio Decidendi: Duty liability on an intermediate stage does not arise unless the process results in manufacture of a distinct and marketable product.

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