Concept of “Marketable‟ under Goods & Excisable goods :
Unless the goods are capable of being marketed, they cannot be charged to duty. Marketability is the capability of a product of being put into the market for sale. In order to become goods, an article must be something, which can ordinarily come to the market to be bought and sold. Marketability is an essential ingredient in order to render goods dutiable under law. Whether a product is marketable or not is to be decided on the facts of each case.
Let us examine some important cases under marketability: –
1. The Supreme Court held that to become ‘goods‘, an article must be something which can ordinarily come to the market to be bought and sold. Articles in crude or elementary form are not dutiable as they are merely intermediate products and are not goods. It, therefore, held that aluminium cans or torch bodies produced by extrusion process were neither sold nor marketable and hence were not ‘goods‘ and not liable to excise duty. It is clear from this decision that goods must be marketable and known in the market as such, in order to be exigible to duty.
[Union Carbide India Ltd. v. Union of India (1986) (24) ELT-169]
2. The Supreme Court has held that the duty of excise is on the manufacture of goods and for an article to be “goods”, it must be known in the market as such or must be capable of being sold in the market as goods. Actual sale is not necessary. Usage in captive consumption is not determinative of whether the article is capable of being sold in the market or is known in the market as goods. Even transient items or articles can be goods, provided that they are known in the market as distinct and separate articles, having separate uses. They would still become goods if they were capable of being marketed during the said short period of their life. Thus, goods with unstable character can be theoretically marketable if there was a market for such transient types of articles, but one has to take a practical view on the basis of available evidence.
[C.C.EX. v. Ambalal Sarabhai Enterprises (1989) (43) ELT-214]
3. The Supreme Court has held that marketability is essential if an article is to be liable to excise. Merely because an article is specified under the Tariff, it would not be correct to state that it is chargeable to duty, unless it is proved that the goods are marketable. Prior to this decision in Bhor Industries, it was the practice to hold all goods specified in the Tariff as chargeable to duty, regardless of this criterion of marketability. The Court held that it would be necessary to find out whether the goods are known in the market as separate, distinct and identifiable commodities.
[Bhor Industries Ltd. v. C.C.EX. (1989) (40) ELT-280]
4. Following the decision in Bhor Industries, the Madras High Court, in the instant case, has held that where a product could neither be sold nor consumed in the market, nor was capable of being sold or consumed, it would not be liable to duty.
[Madura Coats Ltd. v. Asstt. Collector of C.C.EX. (1990) (48) ELT-321]
5. The Supreme Court has held that mere specification of an item in the Central Excise tariff is not sufficient in the absence of the marketability test.
[Ion Exchange India Ltd. v. C.C.EX 1999 (112) ELT-746[
6. Tribunal has held that an article is not liable to excise merely because it is specified in the Tariff Schedule, unless it is known as goods in the market. Marketability is an essential ingredient for Dutiability. This decision of the Tribunal is important since it first interpreted the Supreme Court‘s criterion of marketability, as laid down in the Bhor Industries‘ case, that goods were not excisable even though they were specified in the Excise Tariff, unless the test of marketability was met.
[CCEX. v. Bakelite Hylam, Ltd. (1990) (46) ELT-552]
7. Karnataka High Court has held that for Dutiability, a product must pass the test of marketability even if it is a transient item, which is captively consumed in, the manufacture of other finished products. It is the onus of the Department to produce evidence of marketability.
[Cipla Ltd. v. UOI (1990) (46) ELT-240]
8. The Bombay High Court held that if a product is not a marketable commodity, then no excise duty is leviable.
[UOI v. CEAT Tyres India Ltd. (1989) (43) ELT-26]
9. The Calcutta High Court held that articles are not ‘goods‘ under section 3 of the Act unless they are marketable. The Court has also held that goods which are specified in the excise tariff are presumed to be excisable unless shown to be non marketable and actual sales are not necessary in order to establish marketability.
[UOI v. Bata India Ltd. (1993) (68) ELT-756]
10. Marketability is a question of fact to be decided in the facts of each case. The fact that goods are not actually marketed is of no relevance nor is it necessary that goods in question should be generally available in the market. Marketability does not depend upon the number of purchasers nor is the market confined to territorial limits of India.
[A.P. State Electricity Board v. CCE 1994 (70) ELT (SC)]