Marketability is the test for excise duty on captive intermediate goods; Revenue must prove saleable distinct commodity status.

Intermediate products used in captive consumption are dutiable under the Central Excise Act only if they are shown to be marketable as distinct commodities capable of being bought and sold. The decisive test is marketability, not mere classification under the tariff. The burden lies on the Revenue to prove that the goods are known in the market and capable of sale. On the facts discussed, no market enquiry, testing material, specifications, or expert evidence established that the rubberised cotton fabrics were marketable. The duty demand was therefore not sustainable, and the challenge to its setting aside failed.

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Issues: Whether rubberised cotton fabrics emerging as an intermediate product in the manufacture of canvas shoes were marketable goods liable to central excise duty under Section 3 of the Central Excise Act, 1944.

Analysis: Duty under the Central Excise Act attaches only to goods that are capable of being bought and sold in the market. An intermediate product used wholly within the factory is not automatically dutiable merely because it is classifiable under the tariff. The decisive question is marketability, and the burden to establish that the product is a marketable commodity rests on the Revenue. On the evidence, no market enquiry, specification, testing, or expert material was produced to show that the rubberised cotton fabrics were known in the market as a distinct commodity or were capable of sale as such. Mere reliance on cited decisions did not discharge that burden.

Conclusion: The rubberised cotton fabrics were not shown to be marketable goods and were, therefore, not liable to excise duty; the Revenue's appeal fails.

Final Conclusion: The order setting aside the duty demand was sustained, and the Revenue challenge was rejected.

Ratio Decidendi: Intermediate products used in captive consumption are excisable only if the Revenue proves that they are marketable as distinct commodities capable of being bought and sold in the market.

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