The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, has set aside a central excise duty demand of ₹95.93 lakh holding that stationery and printed materials manufactured exclusively for the Railway’s internal use could not be subjected to excise duty when the Revenue failed to establish their marketability.
The bench of Ajay Sharma (Judicial Member) and M.M. Parthiban (Technical Member) also relied upon its earlier decisions concerning railway printing presses, observing that the issue had already been settled in favour of the assessee. It held that the impugned goods were not dutiable on the grounds of both classification and marketability.
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The appellant was engaged in printing and manufacturing various stationery products, including registers, account books, receipt books, forms, order books, letter pads, memorandum pads, binders, file covers and manifold business forms.
These materials were produced specifically for use by Western Railway departments and divisions. Among the materials were reservation slips used for railway ticket bookings, receipt books used by Travelling Ticket Examiners for collecting excess fares, fines and penalties, and working timetables used by motormen for operating trains.
The printed materials contained specific details, characters, letters and the Western Railway logo and were intended exclusively for internal use within Western Railway. According to the appellant, such goods could not be brought into the general market for sale or distribution and therefore lacked the essential characteristic of marketability.
The Department classified the goods under Central Excise Tariff sub-heading 4820.10 and contended that they were liable to central excise duty at 12%, along with applicable education cess and higher education cess.
A Show Cause-cum-Demand Notice dated March 19, 2014 was issued demanding ₹95,93,181 as central excise duty, together with interest under Section 11A of the Central Excise Act, 1944.
The adjudicating authority confirmed the entire duty demand and also imposed a penalty equivalent to the duty under Rule 25 of the Central Excise Rules, 2002. The appellant thereafter approached the CESTAT challenging the demand and penalty.
Before the CESTAT, the appellant pointed out that the same issue had already been examined by coordinate Benches of the Tribunal in earlier proceedings.
The appellant relied upon Final Order No. A/1140-1144/15/EB dated May 6, 2015 and Final Order No. A/87080-87081/2023 dated November 2, 2023, wherein similar demands relating to railway printing activities had been decided in favour of the appellant.
The Revenue, on the other hand, reiterated the findings contained in the impugned adjudication order.
The Tribunal identified the central issue as whether the stationery and printed materials falling under CETH 4820.10 were liable to central excise duty for the period July 2013 to January 2014, and whether the duty demand confirmed by the Commissioner was legally sustainable.
The Bench noted that the dispute concerning earlier periods had already been decided by the Tribunal and that those decisions had examined both the excisability of the goods and their liability to central excise duty. The earlier decisions had concluded that the excise duty liability was not legally sustainable.
A significant part of the Tribunal’s reasoning concerned the requirement of marketability for levy of central excise duty.
The Tribunal referred to its earlier decision in Dy. Chief Manager (Printing & Stationery), Central Railway, where it had held that goods produced by a railway printing press for captive use would not attract excise duty if the Department failed to establish that those goods were capable of being bought and sold in the market.
In that earlier case, the printing press manufactured forms and other printed materials for Central Railway’s day-to-day functioning. The Tribunal had examined the nature of the products and found that they were predominantly specially printed forms rather than ordinary commercial registers or books.
The Tribunal had further held that where printed materials contained detailed information specific to railway operations and were meant solely for internal railway use, they could neither be used nor would they be useful to another person. Consequently, they were not capable of being bought and sold for consideration.
The Tribunal’s earlier ruling had additionally considered whether the printed materials should fall under Chapter 48 or Chapter 49 of the Central Excise Tariff.
After examining the nature of the materials, the Tribunal had found that the products were essentially printed forms containing detailed information, with only certain portions left blank for completion. It held that such materials were products of the printing industry and were classifiable under Chapter 49, rather than Chapter 48.
The Bench referred to judicial precedents concerning printed forms, tickets and similar products. Those decisions recognised that printed articles could continue to be treated as products of the printing industry even where certain particulars were required to be filled in subsequently.
The Tribunal also referred to the Supreme Court’s decision in Metagraphs Pvt. Ltd., which examined when printing constitutes the essential character of a product. The principle considered was that where printing brings the product into existence or imparts its substantial character and quality, the resulting article may constitute a product of the printing industry.
The Tribunal placed particular emphasis on the fact that the Revenue had not undertaken an exercise or produced evidence establishing that the specific railway printed materials were marketable.
It observed that merely claiming that similar products are commercially known in the market was insufficient. The relevant question was whether the particular goods manufactured by the appellant were capable of being bought and sold for consideration.
The Bench relied on several Supreme Court decisions concerning marketability, including Gujarat Narmada Valley Fertilizers Co. Ltd., Collector of Central Excise, Patna v. Tata Iron & Steel Co. Ltd., F.G.P. Ltd. v. Union of India, and Bhor Industries Ltd. v. Collector of Central Excise.
The cited principles establish that marketability is an essential ingredient for treating an article as excisable goods and that the burden of proving marketability rests on the Revenue.
The Tribunal also referred to the Supreme Court’s observations in Bhor Industries Ltd., reiterating that an article must be capable of being sold to a consumer to qualify as goods for the purpose of excise law.
The Supreme Court principles cited by the Tribunal emphasise that merely because an article falls within a tariff entry does not automatically make it dutiable. The article must qualify as goods known to the market as a separate and identifiable commodity. Thus, marketability is an essential ingredient for excisability.
Applying these principles, the CESTAT found that the Revenue had failed to discharge its burden of proving that the printed materials manufactured by Western Railway Printing Press were marketable.
The Tribunal took note of the fact that the printed materials were not intended for general use in the market but were produced for the Railway’s own internal requirements. The products carried Railway-specific names, details and information and were not capable of being bought and sold for consideration.
Accordingly, the Tribunal concluded that the goods did not satisfy the test of marketability and therefore could not be treated as dutiable excisable goods.
The Bench further noted that in its own earlier decision involving the same appellant, dated November 2, 2023, the Tribunal had already held that the central excise duty demand on the impugned goods was unsustainable.
That decision had followed the ruling in Dy. Chief Manager (Printing & Stationery), Central Railway, and held that the Revenue had not discharged its burden of establishing marketability where the printed materials were intended exclusively for the Railway’s own use.
In the present appeal, the Tribunal held that the issue was no longer an open question, as the same dispute had already been settled by coordinate Benches.
The Bench observed that the impugned adjudication order confirming the central excise demand lacked merit. It therefore set aside the order dated May 21, 2014 and allowed the appeal in favour of the appellant.
The ₹95.93 lakh central excise duty demand, along with the consequential interest and penalty flowing from the impugned order, was consequently set aside, with consequential relief in accordance with law. The Tribunal’s order was pronounced in open court on September 22, 2026.
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