2008 (10) TMI 544 - AT - Central Excise

Sugar syrup - Intermediate product - marketability/excisability - Demand - Extended period of limitation -

Summary

Issues:
- Marketability of sugar syrup emerging in the course of manufacture
- Time-barred demand of duty for the period May 1995 to April 1997

Analysis:

Marketability of Sugar Syrup:
The case involved determining whether the sugar syrup emerging during the manufacturing process was marketable and hence dutiable under SH 1702.30 of the Central Excise Tariff Act. The Department alleged that the sugar syrup was stable with adequate shelf-life and hence dutiable. The appellants contested this claim, arguing that the sugar syrup was not marketable. Circulars by the C.B.E.C. were presented, with differing views over time regarding the marketability of sugar syrup. The Chief Chemist's opinion supported the stability of sugar syrup with a concentration above 65%. The Board clarified that marketability was a crucial criterion for excisability. The appellants' own statements and processes indicated the sugar syrup was either consumed internally or sold to distributors. Previous judgments were cited to support both sides of the argument. Ultimately, the Tribunal found in favor of the Revenue, sustaining the demand of duty on the sugar syrup.

Time-barred Demand of Duty:
Regarding the issue of limitation, the appellants argued that all material facts were disclosed to the Department early on, and there was a change in the departmental view over time. The Department raised the demand for an old period (May 1995 to April 1997) in a show-cause notice dated 15-5-2000. The Tribunal noted the fluctuation of views within the department and considered the timing of the demand in relation to the period of dispute. Citing a relevant precedent, the Tribunal found in favor of the appellants on the ground of limitation. Consequently, the demand of duty and penalty were vacated based on the limitation issue, and the appeal was allowed in this regard.

In conclusion, the Tribunal upheld the demand of duty on the marketable sugar syrup but vacated the same on the ground of limitation, ruling in favor of the appellants.