Marketability test under Central Excise law determines whether intermediate stems in GLS lamp manufacture are excisable.

Intermediate stems arising during continuous GLS lamp manufacture were treated as non-marketable and therefore not excisable under Central Excise law. The note states that duty arises only when manufactured goods satisfy the test of marketability; mere tariff classification or captive use is insufficient. It further records that the manufacturer relied on evidence showing an integrated automatic process, no storage of stems, and no viable market for the product, while the revenue produced no independent proof of marketability. The demand, penalties and interest were said to be unsustainable on these facts.

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Issues: Whether the intermediate product "stems" emerging during the continuous manufacture of GLS lamps was marketable and therefore excisable, and consequently whether the demand, penalties and interest could be sustained.

Analysis: The Tribunal applied the settled principle that duty under the Central Excise law is attracted only when goods are produced or manufactured and the resultant article satisfies the test of marketability. Mere inclusion in the tariff or captive use by the manufacturer does not by itself establish excisability. On the evidence, the manufacturer showed by affidavit that the process was fully integrated and automatic, that the stems were not stored, and that handling them manually would damage quality. Affidavits from dealers supported the claim that there was no market for such stems. The revenue did not adduce independent evidence to prove marketability. The Tribunal also noticed that, on similar facts, the Delhi High Court had held that stems arising in bulb manufacture were not liable to excise duty and that the show cause notices were without jurisdiction.

Conclusion: The stems were held not to be marketable excisable goods. The duty demand, penalties and interest could not be sustained, and the appeals were allowed.

Final Conclusion: The impugned order was set aside because the intermediate stems failed the marketability test and were therefore not dutiable under the Central Excise law.

Ratio Decidendi: An intermediate product is not liable to excise duty unless it is shown to be marketable or capable of being marketed, and captive consumption by itself does not satisfy that requirement.

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