Marketability test in continuous blanket manufacture: intermediate material lacked independent market identity and was not excisable goods.

Continuous manufacture of acrylic blankets was treated as a single, composite process in which unfinished twin blankets passed through further operations of printing, drying, brushing, raising, shearing, polishing, cutting, hemming and packing. On the record, no reliable material showed that a distinct knitted fabric emerged as a separately identifiable commercial commodity, and the Revenue did not displace the process description or expert opinion relied on by the assessee. Applying the settled marketability test, the alleged intermediate stage had only a transient character and no independent market identity, so it was not excisable goods. Notification No. 67/95-C.E. was also held applicable to the final product.

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Issues: Whether the intermediate product said to emerge during the continuous manufacture of acrylic blankets was marketable goods so as to attract additional excise duty, penalty and interest.

Analysis: The manufacturing process was found to be continuous, composite and uninterruptable, producing unfinished twin blankets in continuous length which underwent further operations of printing, drying, brushing, raising, shearing, polishing, cutting, hemming and packing. On the record, there was no reliable material to show that any distinct knitted fabric (processed) came into existence as a separately identifiable commercial commodity. The Revenue did not displace the appellants' process description or the expert opinion of the IIT professor. Applying the settled test that an article is excisable only if it is known to the market as goods and is capable of being bought and sold, the alleged intermediate stage material had only a transient character and no independent market identity. Notification No. 67/95-C.E. was also held applicable to the appellants' case in relation to the final product.

Conclusion: The intermediate product was not marketable goods and no additional excise duty, penalty or interest could be sustained on that basis.

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