In Brief
The respondent manufactured perfumery compounds (odoriferous substances) in its Bangalore unit and transferred them to its Mysore unit for application to agarbathis. The Revenue sought excise duty under the Central Excise Tariff Act, while the respondent claimed exemption under a 2001 Board Circular clarifying that odoriferous compounds in continuous manufacturing are non-excisable. The Supreme Court held that the Circular applies only to paste/dough forms in continuous processes, not separately manufactured liquid compounds. Since the respondent's perfumery compound was stored, transported, and demonstrably capable of being sold in the open market (with evidence of some sales), it was excisable. Actual marketing is unnecessary; marketability is the decisive test for excise duty.
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