2015 (10) TMI 2134 - AT - Central Excise

Marketability - making of cream within their factory by mixing ingredients like sugar, Vanaspati, milk powder, flavour etc. to be used in the Manufacture of cream biscuits under Parle brand name on job works bases - Captive consumption - Exemption under Notification No. 67/1995-CE - Held that - In respect of the impugned goods it is necessary for the Department to establish the marketability (not necessarily actual sale of the very same goods made by the appellant). - No test has been carried out regarding the shelf-life, the capability of storage, the availability of market for such goods and evidence to the effect that such similar products are known in the market for trading. The reasoning of the learned Commissioner (Appeals) that the job charges for manufacture of cream of mass production and ultimately for biscuits has been separately fixed by the principal manufacturer (M/s Parle) itself proves that sugar cream is different goods and separately available at the price fixed is mis-leading. The fact that the job charges are fixed separately for cream/biscuits by itself does not establish the marketability of the product which are wholly consumed in the manufacture of cream biscuits as per the specifications provided by the principal manufacturer. - to charge excise levy on the cream captively consumed it is necessary to support the contention of the marketability of the product with evidence which may include the details of shelf-life, general availability of market for such product, market inquiry etc - matter remanded back - Decided in favour of assessee.

Summary

Issues:
Tax liability on cream used in manufacturing cream biscuits under Central Excise levy; Exemption under Notification No. 67/1995-CE for cream captively consumed; Marketability of the cream product for Central Excise purposes.

Analysis:
The appellant, engaged in manufacturing Parle brand Cream Biscuits on a job work basis, faced a tax dispute regarding the cream made within their factory and used in biscuit production. The original order confirmed the demand on cream captively consumed, leading to an appeal where the order was upheld. The appellant argued that the cream product, having a limited shelf-life of 24 hours, was not marketable as such and likened it to 'Mishthan' or 'Mithai,' seeking exemption under Notification No. 3/2006-CE. The Department failed to provide evidence of the cream's marketability.

During the hearing, the appellant contended that the cream's marketability was not established by the Department, presenting evidence that the cream with specific formulation and flavor was not known in the market. The Department did not counter this evidence or prove the marketability of the product. The authorities held that goods need not be marketed to be subject to Central Excise duty, emphasizing the capability of goods to be bought and sold in the market. The original authority referred to a Supreme Court observation on marketability and found the cream manufactured by the appellant to be marketable despite not being actively marketed by them.

The Tribunal observed a lack of evidence supporting the marketability of the cream product, such as shelf-life, market availability, and similar products known in the market. The job charges fixed separately for cream and biscuits were deemed insufficient to establish marketability. Consequently, the Tribunal remanded the matter to the original authority for a detailed examination of marketability aspects, including shelf-life, market availability, and market inquiry, allowing the appellant to defend their case. The appeal was disposed of by way of remand for further examination and fresh orders.