Manufacture must be proved before excise duty applies; alleged sulphuric acid from maize processing was not established.

Excise duty could not be sustained where the department failed to establish that sulphuric acid had actually come into existence as a manufactured product from the treatment of maize kernel with water and sulphur dioxide. The Tribunal found that the alleged output was only a dilute, unstable solution and not sulphuric acid as commercially and scientifically understood. Since the demand and the orders below proceeded specifically on sulphuric acid, the absence of proof of manufacture was fatal; marketability therefore did not arise for consideration. The demand was set aside and the assessee obtained consequential relief.

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Issues: Whether the process of treating maize kernel with water and sulphur dioxide resulted in manufacture of sulphuric acid liable to duty, and whether duty could be demanded on the product so alleged to have emerged.

Analysis: The alleged product was only a dilute, unstable solution arising from the process, and the evidence did not establish that sulphuric acid, as commercially and scientifically understood, had come into existence. The demand in the notice and the orders below specifically proceeded on sulphuric acid, not on any other product, and the Tribunal held that the product said to be manufactured was not shown to have been manufactured at all. In view of that finding, the further question of marketability did not arise for decision.

Conclusion: Duty could not be levied on sulphuric acid, as its manufacture was not established. The issue was decided in favour of the assessee.

Final Conclusion: The demand and the orders confirming it were set aside, with consequential relief to the assessee.

Ratio Decidendi: Excise duty cannot be sustained unless the department establishes that the specified excisable product has in fact come into existence as a manufactured article.

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