Marketability and buyer-brand use defeated exemption claim, sustaining duty while reducing penalty and confiscation consequences.

Reed type frequency meters cleared to another manufacturer were treated as marketable excisable goods because they were capable of sale, even though the buyer later carried out testing and quality checks. Embossing the buyer's mark "AE" was treated as use of the buyer's brand name, so the small-scale exemption claim failed. On that basis, the duty demand was sustained. The absence of mala fide justified partial relief on ancillary consequences: confiscation of plant and machinery was set aside as harsh, and the personal penalty and redemption fines were reduced.

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Issues: (i) whether the reed type frequency meters cleared by the assessee-manufacturer were marketable excisable goods, and whether they lost exemption because they bore the other appellant's brand name; (ii) whether the demand of duty was sustainable and what relief, if any, was warranted in respect of penalty, confiscation, and redemption fine.

Issue (i): Whether the reed type frequency meters cleared by the assessee-manufacturer were marketable excisable goods, and whether they lost exemption because they bore the other appellant's brand name?

Analysis: Marketability is a question of fact to be determined on the circumstances of each case, and goods need not be generally available in the open market so long as they are capable of being bought and sold. The meters were manufactured from the assessee's own raw material, were cleared exclusively to the other appellant, and were accepted as goods capable of sale even though the recipient carried out further testing and quality checks. The evidence also showed that the mark "AE" was embossed on the meters and functioned as the brand name of the buyer-appellant, not merely as a house mark. On these facts, the meters were not shown to be unmarketable semi-finished articles.

Conclusion: The meters were marketable excisable goods, and the brand-name objection to exemption failed against the assessee.

Issue (ii): Whether the demand of duty was sustainable and what relief, if any, was warranted in respect of penalty, confiscation, and redemption fine?

Analysis: Since the goods were found to be marketable and branded with the buyer's brand name, the demand of duty was sustainable. However, the absence of mala fide justified relief in the ancillary penal consequences. The confiscation of plant and machinery was considered harsh and was set aside, and the personal penalty and redemption fines were reduced.

Conclusion: The duty demand was upheld, while penalty, confiscation, and redemption fine were substantially reduced or set aside in part in favour of the assessee.

Final Conclusion: The appeals succeeded only to the limited extent of relief against penal and confiscatory consequences, while the duty liability on the cleared meters remained confirmed.

Ratio Decidendi: Goods are dutiable when they are marketable and sold as such, even if further processing or testing is carried out by the buyer, and use of the buyer's brand name defeats the claim to small-scale exemption.

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