2016 (6) TMI 916 - AT - Central Excise

Captive consumption - manufacture of sugar solution / syrup as intermediate product - marketability - During the course of manufacture of fruit drink the respondent also manufactured sugar syrup / solution which is captively consumed - Held that - It is necessary for the Revenue to show positive evidence regarding marketability of the product. It may not be necessary to show that the respondent actually marketed such product. However, such product is known in the market and it is capable of being bought and sold has to be established with certain positive evidence. In the present case no such evidence is available. Further, the demand was not sustainable on time limit also. It is an admitted fact that the classification and excise liability of sugar syrup has been subject matter of many clarifications by Board and litigation. - Demand of duty set aside on merit as well as period of limitation - Decided in favor of assesse.

Issues:
1. Liability of sugar syrup manufactured as an intermediary product to excise duty.
2. Interpretation of marketability and preservative content of sugar syrup.
3. Time bar for excise duty demand.

Analysis:
1. The case involved appeals by the Revenue against an order regarding the liability of sugar syrup manufactured during the production of fruit-based drinks to excise duty. The Revenue contended that the sugar syrup should be considered liable for excise duty under a specific tariff heading. The Original Authority had confirmed a duty demand and penalties, but the Commissioner (A) set aside the order, stating that the sugar syrup was not a stable product with proven marketability, hence not subject to excise duty. The Revenue appealed against this decision.

2. The main grounds of appeal by the Revenue were that the Commissioner (A) erred in not considering the sugar syrup as liable to excise duty. The Revenue argued that the addition of preservatives during the manufacturing process should classify the sugar syrup as having marketability, even if it is not a widely known product in the market. The Revenue also challenged the Commissioner (A)'s finding on time bar, stating that the respondent did not inform the department about the sugar syrup production.

3. The respondent argued that the sugar syrup was not marketable and could not be stored or sold due to its nature. They highlighted that no evidence was presented by the Revenue to prove the marketability of the sugar syrup. The respondent emphasized that the uncertainty regarding the tax liability of the product, as evidenced by various circulars and legal decisions, justified their position that there was no intention to defraud or suppress information. The Tribunal noted that the Revenue failed to provide conclusive evidence of preservatives in the sugar syrup, its shelf life, or its marketability.

4. The Tribunal examined previous decisions on the excise duty liability of similar intermediate products and emphasized the need for positive evidence of marketability to establish excise duty liability. The Tribunal found that the Revenue did not present such evidence in this case. Additionally, the Tribunal noted that the demand was not sustainable within the time limit and that the Commissioner (A) had correctly concluded that there was no suppression of facts by the appellants. Consequently, the Tribunal upheld the Commissioner (A)'s decision and dismissed the appeals by the Revenue.

In conclusion, the Tribunal found that the sugar syrup manufactured as an intermediary product during the production of fruit-based drinks was not liable to excise duty due to the lack of evidence of marketability and preservative content. The Tribunal also ruled that the demand was not sustainable within the time limit and upheld the decision of the lower appellate authority.

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