2018 (1) TMI 465 - AT - Central Excise

Benefit of N/N. 67/95 dated 16/03/1995 - intermediate product namely sugar syrup (prepared within the factory, used in manufacture of biscuits) - Held that - the issue has already come up before the Tribunal in the case of M/s Ganesh Bakers Pvt. Ltd. V/s CCE & ST, Raipur 2017 (11) TMI 471 - CESTAT NEW DELHI , where relying in the case of Lucky Biscuit Company vs. CCE, Patna 2017 (7) TMI 235 - CESTAT KOLKATA , where it was held that CBEC Circular dated 7.11.1994 relied upon by the lower authorities has been issued in respect of sugar syrup produced in the manufacture of aerated water and ayurvedic medicines. Hence, the same cannot be applied to the sugar syrup being produced for the biscuits without establishing that the two products are identical. When the impugned order has been set aside there is no justification for levy of the penalties. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of sugar syrup made for captive use in the manufacture of exempted biscuits under central excise duty.
2. Marketability of the goods in question.
3. Justification for levy of penalties.

Classification Issue:
The appellant, engaged in biscuit manufacturing, claimed excise duty exemption for sugar syrup used in-house. The department denied the exemption under Notification No. 67/95. The Tribunal analyzed the fructose content and classification under sub-heading 17029090. It emphasized the necessity of chemical tests for precise classification. Referring to previous judgments, it highlighted the importance of proving fructose content for correct classification. The Tribunal held that without evidence of fructose content meeting the criteria, classification under sub-heading 17029090 was unsustainable. The judgment emphasized the need for accurate testing and dismissed the department's classification.

Marketability Issue:
Regarding marketability, the Tribunal stressed the importance of establishing marketability based on the product's condition when it emerges. It rejected the presumption of marketability based on similar products from other manufacturers. The judgment clarified the distinction between invert sugar syrup and cane sugar syrup, emphasizing the need for chemical tests to determine the type of syrup accurately. It highlighted the incorrect basis for assuming marketability and set aside the impugned order. The Tribunal emphasized the necessity of proving marketability based on accurate testing and evidence.

Penalties Justification Issue:
After setting aside the impugned order, the Tribunal found no justification for penalties. It upheld the cancellation of penalties by the Appellate Authority, dismissing the department's appeal. The judgment emphasized the importance of justifying penalties based on the validity of the impugned order. It concluded that with the impugned order set aside, there was no basis for levying penalties. The Tribunal allowed the appellant's appeals and dismissed the department's appeal, ensuring the penalties were rightfully canceled.

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