2017 (11) TMI 1462 - AT - Service Tax

Excisability - sugar syrup - captive consumption - Whether sugar syrup made by the appellant for captive use in the manufacture of exempted biscuits is chargeable to Central Excise duty? - Held that - identical issue has came up before the Tribunal in the case of Rishi Bakers Pvt. Ltd. vs. CCE, Kanpur 2015 (4) TMI 893 - CESTAT NEW DELHI , where it was held that Since the sugar syrup is used in the manufacture of the exempted biscuits, the benefit of N/N. 67/95-CE would not be available - sugar syrup is not subject to excise duty - demand set aside. Excisability/marketability - special cream - captive consumption in manufacture of biscuits - Held that - test i.e. marketability has not been examined by the lower authority in the instant case. When it is so, then we set aside the impugned order regarding the cream and remand the matter back to the adjudicating authority to examine the test of marketability of the cream and decide the matter denovo - matter on remand. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Classification of sugar syrup under Central Excise duty.
2. Marketability of the cream used in the manufacture of biscuits.

Classification of Sugar Syrup:
The appeal contested the demand raised by the department on the grounds that sugar syrup used in manufacturing exempted biscuits was subject to excise duty. The Tribunal referred to a previous case where it was established that the full duty exemption for intermediate products used for captive consumption is available only if certain conditions are met. The Tribunal emphasized the need for evidence regarding the fructose content in the sugar syrup to classify it correctly. It was held that the classification under sub-heading 17029090 was not sustainable due to lack of evidence supporting the required fructose content. The Tribunal also highlighted the importance of proving marketability for attracting excise duty, remanding the matter back for further examination.

Marketability of Cream:
The second issue revolved around the excise duty demand on the cream used in biscuit manufacturing. The Tribunal noted that the test of marketability had not been examined by the lower authority. Citing a Supreme Court case, the Tribunal emphasized the significance of establishing marketability for such products. Consequently, the impugned order regarding the cream was set aside, and the matter was remanded back for a fresh examination of marketability, with the opportunity for the appellant to present additional evidence if required.

In conclusion, the appeal was partially allowed, with the Tribunal setting aside the portions of the impugned order related to sugar syrup and cream, respectively. The detailed analysis of each issue highlighted the necessity of providing evidence to support classification under excise duty and establishing marketability for products used in manufacturing to determine the applicability of excise duty.