2006 (4) TMI 44 - AT - Central Excise

Central Excise Sugar Cess Act Appellant manufactured sugar of larger grain from sugar of smaller grain and classifiable as sugar confectionery under different tariff heading Chargeable to sugar cess again as sugar confectionery defined in Sugar Cess Act

Summary

Issues:
Manufacturing activity of converting sugar from small to larger grain and liability to pay sugar cess.

Manufacturing Activity Issue:
The case involved the appellants who manufactured sugar in larger grain from sugar in small granule and were charged sugar cess for the activity. The appellants argued that since they only converted sugar from small to larger grain, it did not constitute manufacturing activity and hence no cess should be charged. The learned S.D.R. contended that the sugar produced by the appellants, although derived from small granules, had a different name in the market and met the definition of sugar under the Sugar Cess Act, 1982. The S.D.R. relied on a precedent from the Orissa High Court which distinguished between different types of sugar products.

Analysis - Manufacturing Activity Issue:
The Tribunal examined the classification of the sugar manufactured by the appellants, which was categorized under Chapter Heading 1704.90 as sugar confectionary by the Assistant Commissioner. Despite the appellants claiming it was sugar of larger grain, they did not provide further details on the nature of the sugar. The Tribunal noted that while sugar confectionary is distinct from regular sugar, it still falls within the definition of sugar as per the Sugar Cess Act. Therefore, the Tribunal upheld the Commissioner (Appeals)'s decision to charge sugar cess on the sugar manufactured by the appellants, dismissing the appeal.

Liability to Pay Sugar Cess Issue:
The key issue was whether the sugar produced by the appellants, even though derived from small granules, qualified as sugar under the Sugar Cess Act, 1982, and thus was liable to pay sugar cess. The appellants argued that the conversion process did not amount to manufacturing activity, while the S.D.R. contended that the sugar produced met the criteria for classification as sugar under the Act.

Analysis - Liability to Pay Sugar Cess Issue:
After considering the arguments from both parties, the Tribunal concluded that the sugar manufactured by the appellants, despite being converted from small granules to larger grain, fell under the definition of sugar as per the Sugar Cess Act. The Tribunal highlighted that the sugar confectionary produced by the appellants, while different from regular sugar, still qualified as sugar and was subject to sugar cess. Therefore, the Tribunal upheld the decision to charge sugar cess on the sugar manufactured by the appellants, as per the provisions of the Act.