2016 (7) TMI 80 - AT - Central Excise

Demand of duty on sugar syrup consumed captively for manufacture of exempted finished goods - test of marketability - Held that - We find that the test report clearly states that the samples contained less than 65% sugar. The test report does not indicate the date on which the test was conducted or if the samples are deteriorated or not. In view of that the basic ground on which the Commissioner (Appeals) has based his order are found to be misplaced. We find that the Circular No. 780/13/2004-CX dated 12/03/2004 rightly points out that what is relevant is the test of marketability and not the sugar contents in the syrup. We find that there is no evident whatsoever of the test of marketability in the proceedings anywhere. - Decided in favour of assessee

Summary

Issues: Determination of marketability of sugar syrup for excise duty based on sugar content and shelf life.

Analysis:
1. Issue of Marketability: The case involved the determination of whether sugar syrup, used in the manufacture of exempted finished goods, was marketable and thus chargeable to duty. The appellant argued that the sugar syrup was not marketable as it did not have a shelf life. Initially, the original adjudicating authority ruled in favor of the appellant based on a test result showing 33.3% sugar content, as per CBEC Circular No.75/75/94-CX. However, the Commissioner (Appeals) reversed this decision, relying on a report indicating 56.7% sugar content and shelf life, citing Circular No.780/13/2004-CX.

2. Contention of the Appellant: The appellant referred to CBEC Circular No.226/60/96-CX, highlighting that syrups with less than 65% sugar content may not have a shelf life without preservatives. The appellant argued that the test report did not specify the testing date, questioning the conclusion on shelf life. The absence of additives and sugar content below 65% were emphasized to support the claim of non-marketability.

3. Arguments by the Respondent: The respondent supported the Commissioner (Appeals)' decision, citing Circular No.780/13/2004-CX and the Hon'ble Supreme Court's marketability test criteria. The respondent contended that the sugar syrup was marketable irrespective of sugar concentration, making it excisable.

4. Tribunal's Decision: The Tribunal analyzed the test report, noting sugar content below 65% and the absence of details on testing date or sample deterioration. The Tribunal found the Commissioner (Appeals)' grounds misplaced, emphasizing Circular No.780/13/2004-CX's focus on marketability over sugar content. The lack of evidence on marketability led to setting aside the impugned order and allowing the appeal.

In conclusion, the judgment centered on the marketability of sugar syrup for excise duty, considering sugar content and shelf life. The Tribunal's decision highlighted the importance of demonstrating marketability, disregarding the sugar concentration alone. The case underscored the need for clear evidence supporting marketability claims in excise duty matters.