Summary
The manufacturer made liquid agarbathi perfume in Bangalore and transported it to Mysore for use in agarbathis. The Court held that the product was marketable and excisable, notwithstanding captive transfers. The 1999 Board circular concerning nonmarketable compounds in continuous manufacture supplied no exemption for this stored and transported perfume.
Issues
- Whether the Board circular excluded this perfumery compound from excise.
- Whether actual sales were required to establish dutiability.
Held
- The circular addressed nonmarketable intermediate compounds arising in a continuous agarbathi process. It could not be equated with an exemption notification or extended to the separately manufactured liquid perfume transported and stored in barrels here. (¶ 7–10)
- Manufacture and marketability are required for excise. Actual marketing is unnecessary: capability of being bought and sold is decisive, even where purchasers are few or the product is available from only one source. Marketability remains a factual question. (¶ 11–12)
- The compound had a shelf life and could be stored, transported and sold to agarbathi manufacturers. Actual sales to the Tibetan Handicrafts Centre further supported marketability. It was excisable under subheading 3302.90, and CESTAT’s contrary approach could not stand. (¶¶ 9, 13)
Result
Revenue’s appeals allowed; CESTAT orders dated 11 November 2010 set aside; no costs.