2018 (8) TMI 1087 - AT - Central Excise

Excisability/marketability - cream prepared to be used in making of cream biscuits - Captive consumption - Held that - This Tribunal in BHAGWATI FOODS PVT. LTD. VERSUS C.C.E. & S.T., KANPUR 2016 (9) TMI 678 - CESTAT ALLAHABAD , held that, there was no evidence to prove that the sugar syrup in question, in the form in which it comes into existence in the appellants factory, is marketable. The cream which is produced captively is having unique flavour, colour and taste and the cream biscuits manufactured by different manufacturers have different flavours and taste. The Department has not been able to bring any evidence of marketability of creams so manufactured by the appellant - the cream captively produced and consumed in the factory is not marketable as there is no evidence to that effect - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of cream for duty payment in the manufacture of biscuits.

In this case, the Appellants, who are biscuit manufacturers, were not paying duty on the cream produced and consumed in their factory for making cream biscuits. The Revenue argued that the cream should be classified under Tariff Item No. 2106.90 and duty should be levied on it. Various show cause notices were issued demanding Central Excise duty on the cream used in manufacturing duty-exempted biscuits. The Orders-in-Original confirmed the duty demands, leading the Appellants to appeal before the Commissioner (Appeals). The Commissioner upheld the Orders-in-Original, stating that the cream produced was marketable based on market enquiries and the shelf life of the biscuits. The Appellant argued that previous Tribunal orders supported their stance, emphasizing the uniqueness of the cream for their specific biscuits, making it non-marketable. The Appellant also highlighted the absence of evidence proving the cream's marketability. The Appellant's position was supported by the Supreme Court's test that a product must be shown to be available in the market to impose duty.

The Tribunal analyzed previous decisions and found that the cream produced by the Appellants was unique in flavor, color, and taste, tailored for their specific biscuits. The Department failed to provide evidence of the cream's marketability. Relying on the Supreme Court's test, the Tribunal concluded that since there was no proof of the cream being available in the market, duty could not be imposed. The Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the Appellants.