2000 (12) TMI 136 - AT - Central Excise

Summary

Issues:
Challenge to impugned order dated 21/22-2-1998 reversing duty demand and penalty imposition by Deputy Commissioner. Interpretation of Circulars regarding excisability of sugar syrup in manufacturing process. Allegations of duty evasion, lack of marketability of sugar solution, and suppression of material facts. Additional evidence presented by Revenue regarding citric acid use as preservative.

Analysis:
The appeal involved a challenge by the Revenue against the validity of an order dated 21/22-2-1998 passed by the Commissioner of Central Excise (Appeals), which had reversed the order-in-original dated 23-10-1997 by the Deputy Commissioner. The Deputy Commissioner had confirmed a duty demand of 18,10,248/- and imposed penalties on the respondents for violating Rule 174 of the Central Excise Rules. The respondents were engaged in manufacturing products exempted from duty but were found to be producing sugar syrup as an intermediate product without proper registration or classification approval. They contested show cause notices alleging that the sugar solution they prepared was not marketable as sugar syrup. The Deputy Commissioner disagreed, confirming the duty demand and penalties.

The main issue revolved around the interpretation of Circulars issued by the Board regarding the excisability of sugar syrup produced at the intermediate stage of manufacturing. Circular No. 75/75/94 clarified that sugar syrup at the intermediate stage was excisable, but Circular No. 226/60/96 introduced conditions related to solid contents and preservatives like citric acid for marketability. The Commissioner (Appeals) relied on test results showing sugar contents in the solution prepared by the respondents were below the required threshold, supporting the argument that it was not marketable sugar syrup.

The judgment also addressed allegations of duty evasion and suppression of material facts by the respondents. The Commissioner (Appeals) found no evidence to prove that the respondents prepared marketable sugar syrup with required solid contents. The Revenue attempted to introduce additional evidence of citric acid use as a preservative, but the court held that such new claims could not be entertained at that stage, especially without prior allegations in the show cause notices. The judgment emphasized that the admission of citric acid use by the respondents, even if true, was not relevant to the period under dispute.

Ultimately, the court dismissed the appeal and the miscellaneous application filed by the Revenue, concluding that there was no merit in challenging the impugned order. The judgment highlighted the importance of adhering to procedural requirements and the lack of evidence supporting the Revenue's claims of duty liability based on the use of preservatives in the sugar solution prepared by the respondents.