Marketability test for duty liability fails where naval battery parts lack evidence of real marketability and penalty cannot survive.

Goods manufactured to special specifications for naval use were treated as non-marketable where the record did not show a real market or capability of being bought and sold. Independent identity or separate tariff classification was insufficient by itself; the decisive test remained marketability, and the department had to prove it with evidence. On the material before the authority, the plates and other battery parts were not shown to be marketable in the relevant sense, so the duty demand could not be sustained. For the same reason, the penalty under Section 11AC also could not survive.

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Issues: Whether the plates and other parts of electric storage batteries manufactured for the Indian Navy were marketable goods liable to duty, and whether the penalty under Section 11AC could stand.

Analysis: The batteries were manufactured to special specifications for naval use, and the parts were asserted to have no general utility or replacement value. Marketability was the decisive test, and the department had to establish that the goods were capable of being bought and sold. Independent identity or separate tariff classification was not enough by itself. The finding recorded below did not rest on sufficient evidence to show that there was a real market for the goods, and the record did not establish that the components were marketable in the relevant sense.

Conclusion: The duty demand could not be sustained on the material before the authority, and the penalty under Section 11AC also could not survive on that footing.

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