2018 (7) TMI 1196 - AT - Central Excise

Excisability/marketability - Cream mix - intermediate goods - cream was prepared to be used in making of cream biscuits - The Cream Biscuits were exempt from payment of duty - Whether the duty can be demanded on Cream, which is captively consumed? - Held that - Tribunal in the case of Bhagwati Foods 2016 (9) TMI 678 - CESTAT ALLAHABAD held inter-alia that there was no evidence to prove that sugar syrup in question in form in which it comes into existence in the appellants factory was marketable. In the present case also as contended by appellant, Revenue could not produce any evidence of similar goods being available in the market - The Hon ble Supreme Court of India in the case of Union of India V/s Sonic Electochem Pvt. Ltd. 2002 (9) TMI 104 - SUPREME COURT OF INDIA had laid down the test that the product which is specially manufactured and captively consumed in the factory should be shown to be available in the market so as to fasten any duty on the same. The goods which are called cream mix by Revenue are not marketable and, therefore, not excisable - appeal allowed - decided in favor of appellant.

Issues:
1. Classification of cream under Chapter Sub Heading No. 2106.90 for Central Excise Duty.
2. Captive consumption of cream in the manufacture of cream biscuits.
3. Demand of Central Excise Duty on captively consumed cream.
4. Imposition of penalty on the manufacturer and director.
5. Marketability of the goods called 'cream mix' by Revenue.

Analysis:

1. The appeals involved a dispute regarding the classification of cream under Chapter Sub Heading No. 2106.90 for Central Excise Duty. The manufacturer-appellant and its director contested the demand of duty on cream captively consumed in the manufacture of cream biscuits. The Revenue claimed that the cream was classifiable under Chapter Sub Heading No. 2106.90, leading to the demand of Central Excise Duty through a show cause notice.

2. The manufacturer argued that they were manufacturing cream biscuits by mixing raw materials like sugar, fat, skimmed milk powder, color, and flavor, which were homogenized and used in the production of cream biscuits. They contended that the cream mix was specific to their product and not marketable as a standalone item. The Commissioner, however, upheld the demand of Central Excise Duty and imposed penalties, including a personal penalty on the director.

3. The learned counsel for the appellant cited previous Tribunal orders, including one related to sugar syrup in biscuits, to support their contention that captively produced goods not marketable individually should not attract Central Excise Duty. The Tribunal noted that the Revenue failed to provide evidence of similar goods being available in the market, as required by legal precedent.

4. In its analysis, the Tribunal referred to the decision in a previous case and emphasized the necessity of proving marketability for goods subject to Central Excise Duty. It highlighted that the goods termed 'cream mix' by the Revenue were unique, with specific characteristics tailored for the manufacturer's products. As the Revenue could not demonstrate market availability of the goods, the Tribunal concluded that the 'cream mix' was not marketable and, therefore, not excisable.

5. Ultimately, the Tribunal set aside the impugned order, allowing both appeals in favor of the manufacturer and director. The judgment underscored the importance of establishing marketability for goods subject to Central Excise Duty, as per legal principles laid down by the Hon'ble Supreme Court of India in relevant cases.

End of Analysis

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