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2024 (4) TMI 4 - AT - Central ExciseLevy of Excise Duty - marketability of the sugar syrup - captive consumption - sugar syrup emerged as an intermediate product consumed captively in the manufacture of exempted final product viz. biscuits - period from May 2007 to April 2013 - SCN dated 26.05.2012 issued for the period May 2007 to September 2011 - Extended period of limitation - HELD THAT - Before fastening the duty liability on the sugar syrup manufactured by the appellant, it is relevant to establish the marketability as held by the Tribunal in M/S AMBAJI FOODS (INDIA) PVT LTD VERSUS CCE, KANPUR 2010 (8) TMI 714 - CESTAT, NEW DELHI . From the records, we find that the adjudicating authority has not analysed the aspect of marketability of the product analysing the shelf life of the product and other factors as clarified in Board s Circular No.226/60/96-CX dated 03.07.1996 referred by the appellant. The appellant through their miscellaneous applications sought to add grounds about the liability for the period after 12/09/2011 submitting that the amending Notification No.39/2011-CE dated 12.09.2011 allowed exemption to sugar syrup consumed captively in the manufacture of biscuits in the factory. Admittedly, this plea was not taken before the authorities below. However, since it would go to affect the liability for the period after 12.09.2011, following the principles of law settled by the Hon ble Supreme Court in the cases of JUTE CORPORATION OF INDIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND ANOTHER 1990 (9) TMI 6 - SUPREME COURT and DEVANGERE COTTON MILLS LTD. VERSUS COMMISSIONER OF C. EX., BELGAUM 2006 (4) TMI 134 - SUPREME COURT , the said grounds are allowed to be taken. Matter remanded to the adjudicating authority to examine the issue of marketability of the sugar syrup in the light of the Board s Circular No.226/60/96-CX dated 03.07.1996 and also the applicability of amending Notification No.39/2011-CE dt. 12.09.2011 - all the appeals are allowed by of remand to the adjudicating authority.
Issues Involved:
1. Levy of duty on sugar syrup captively consumed in the manufacture of exempted final product (biscuits). 2. Applicability of extended period of limitation for the demand of duty. Summary: Issue 1: Levy of Duty on Sugar Syrup Captively Consumed The appellants, engaged in manufacturing biscuits, availed the benefit of Notification No.3/2006-CE. During the manufacturing process, sugar syrup, classified under heading No.1702.90.90 of CETA, 1985, emerged as an intermediate product. The Revenue contended that the sugar syrup, captively consumed in the manufacture of exempted biscuits, is not eligible for the benefit of Notification No.67/95-CX, thus, excise duty is leviable. The appellants argued that the sugar syrup has no shelf life and is not marketable, and the burden of proving marketability lies with the Revenue. They cited various judgments including Ambaji Foods (India) Pvt. Ltd. Vs. CCE, Chandigarh, and Homemade Bakers (India) Ltd. Vs. CCE, Rohtak, which emphasize that marketability must be established by the Revenue. The Tribunal noted that the adjudicating authority failed to analyze the marketability of the sugar syrup, including its shelf life, as clarified in Board's Circular No.226/60/96-CX. The matter was remanded to the adjudicating authority to examine the marketability and duty liability accordingly. Issue 2: Extended Period of Limitation The show-cause notice dated 26.05.2012, demanding duty for the period May 2007 to September 2011, invoked the extended period of limitation. The appellants argued that due to fluctuating views within the departmental circles on the issue of marketability, the extended period of limitation is unsustainable. They cited the Tribunal's decision in Pepsico India Holdings Vs. CCE, which held that such demands are unsustainable due to fluctuating departmental views. The Tribunal agreed with the appellants, noting that the imposition of penalty under Section 11AC of the Central Excise Act and Rule 25 of the Central Excise Rules is also unsustainable due to the interpretative nature of the issue. Miscellaneous Applications The appellants filed applications to amend the grounds of appeal, citing Notification No.39/2011-CE dated 12.09.2011, which exempts sugar syrup captively consumed in biscuit manufacturing from 12.09.2011. The Tribunal allowed the amendment, noting that the issue affects the liability for the period post-12.09.2011, and remanded the matter to the adjudicating authority for examination. Conclusion The Tribunal remanded the matter to the adjudicating authority to examine the marketability of the sugar syrup and the applicability of the amending Notification No.39/2011-CE dated 12.09.2011. The appeals were allowed by way of remand. Order Pronounced in Open Court on 19.03.2024.
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