2005 (10) TMI 13 - AT - Central Excise

Excitability and Marketability of Sugar syrup comes into existence during process of manufacture of sugar syrup based products

Summary

Issues:
1. Classification of sugar syrup as excisable product under Chapter Heading No. 1702.30 of CETA, 1985.
2. Application of extended period of limitation for duty evasion.
3. Marketability of the sugar syrup product.

Issue 1: Classification of sugar syrup as excisable product under Chapter Heading No. 1702.30 of CETA, 1985.
The case involved a dispute regarding the classification of sugar syrup manufactured by the Respondent as excisable under Chapter Heading No. 1702.30 of CETA, 1985. The Department contended that the sugar syrup was excisable and duty was payable on this intermediate product. The Commissioner, however, ruled in favor of the Respondent, stating that the product did not meet the criteria to be classified as 'Sugar Syrup' under 17/03/30 as it contained additional ingredients beyond sugar and water. The Commissioner also highlighted that the product lacked marketability and shelf life, further supporting the decision that it was not excisable under the specified chapter heading.

Issue 2: Application of extended period of limitation for duty evasion.
The Respondents argued against the application of the extended period of limitation, stating that there was no intention to evade duty and that the mere omission to act did not constitute an attempt to suppress facts. The Commissioner agreed with this stance, referencing a Supreme Court decision in the case of Padmini Products to support the ruling that inaction alone could not be deemed as willful suppression. The Tribunal upheld the Commissioner's decision, citing CBEC Circulars from 1989, 1994, and 1996, which emphasized that when issues were controversial, suppression of facts with an intent to evade duty could not be alleged against the assessees. Consequently, the demand for the period in question was deemed barred by limitation.

Issue 3: Marketability of the sugar syrup product.
The Revenue contested the Commissioner's ruling that the sugar syrup product was not marketable, arguing that similar products were tested and deemed dutiable by a Chemical Examiner. The Revenue further asserted that the product had a shelf life and did not need to be physically bought and sold to be considered marketable. However, the Tribunal disagreed, referencing past decisions that emphasized the importance of marketability in determining excisability. The Tribunal concluded that the sugar syrup product in question, due to the presence of additional ingredients beyond sugar and water, was not marketable and therefore not excisable under Chapter Heading 1702.30 of CETA, 1985.

In conclusion, the Appellate Tribunal CESTAT, Mumbai rejected the Revenue's appeal on both limitation and merits, affirming the Commissioner's decision regarding the classification and marketability of the sugar syrup product. The judgment emphasized the specific criteria outlined in the relevant legal provisions and past judicial interpretations to determine the excisability of the product in question.