1998 (8) TMI 198 - AT - Central Excise

Summary

Issues involved: Classification of sugar syrup under new Tariff sub-heading 1702.30, liability to pay duty, time bar on demand of duty, penalty imposition.

Classification of sugar syrup: The appellants manufactured sugar syrup by dissolving crystal sugar in water, leading to a new product classifiable under Tariff sub-heading 1702.30. The question arose whether duty was applicable on this sugar syrup despite using duty-paid sugar. The Tribunal held that sugar syrup is separately classifiable and liable to duty, rejecting the argument that it was merely a change in the form of sugar.

Liability to pay duty: The Revenue demanded duty from the appellants for the period before the sugar syrup was included in the exemption Notification. The appellants argued that no duty liability arises unless there is a new manufacture and that the product was not marketed by them. However, the Tribunal ruled that duty is leviable on the sugar syrup as it is a manufactured product and marketability was not disproved.

Time bar on demand of duty: The appellants contended that the demand was time-barred as they believed in good faith that the sugar syrup was not dutiable, especially since they were not selling it and the process of manufacture remained the same. The Tribunal agreed, setting aside the demand and penalty due to the gross time bar on the show cause notice.

Penalty imposition: The Tribunal found in favor of the appellants on the plea of limitation, stating that the omission to declare the manufacture of sugar syrup was a bona fide belief due to the circumstances. As the demand of duty was time-barred, the penalty of Rs. 20,000 was also set aside.

Conclusion: The Tribunal disposed of the appeal by holding the sugar syrup liable to duty but setting aside the demand and penalty due to the strong case of the appellants regarding the time bar issue.