2014 (7) TMI 395 - AT - Central Excise

Marketability of sugar syrup - capability of the product being sold in the market or known in the market - Exemption from payment of duty by Notification NO. 3/2006-CE - Held that - The issue of marketability of sugar syrup has not been taken into consideration by the adjudicating authority. The adjudicating authority has to decide the issue of marketability of the sugar syrup in question in view of the observation made by the Tribunal in the case of Ambaji Foods (2010 (8) TMI 714 - CESTAT, NEW DELHI). The impugned order is set aside and the matter is remanded to the adjudicating authority for de novo adjudication after affording an opportunity of personal hearing to the appellant. - Decided in favour of assessee.

Summary

Issues:
Waiver of pre-deposit of duty, marketability of sugar syrup, duty liability on intermediate goods.

Waiver of Pre-deposit of Duty:
The appellant filed an application seeking waiver of pre-deposit of duty amounting to Rs. 43,22,016 along with interest and penalty. The case involved the manufacture of biscuits where sugar syrup was prepared by the appellant and used in the manufacturing process. The revenue contended that duty was payable on the sugar syrup as it was an intermediate excisable product used in the manufacture of exempted biscuits. The appellant argued that the sugar syrup was not marketable as such and relied on a previous Tribunal decision in a similar case. The Tribunal noted that the issue of marketability of the sugar syrup was crucial, and remanded the matter to the adjudicating authority for a fresh decision after considering the marketability aspect.

Marketability of Sugar Syrup:
The crux of the dispute revolved around the marketability of the sugar syrup manufactured by the appellant. The appellant maintained that the sugar syrup was not marketable as a standalone product, while the revenue argued that it was dutiable as an intermediate excisable product. The Tribunal referred to a previous case where it was emphasized that the capability of a product to be sold in the market or known as goods in the market must be established, even if actual sales were not proven. The Tribunal, based on this precedent, directed the adjudicating authority to reevaluate the marketability of the sugar syrup in question before determining the duty liability.

Duty Liability on Intermediate Goods:
The revenue's stance was that since the sugar syrup was utilized in the manufacture of exempted biscuits, duty was applicable on the intermediate excisable product. In contrast, the appellant argued that the demand for duty on the sugar syrup was unsustainable due to its non-marketability as a standalone product. The Tribunal, in line with the appellant's contentions, highlighted the need for the adjudicating authority to thoroughly assess the marketability aspect before reaching a final decision on the duty liability. The Tribunal set aside the impugned order and remanded the case for fresh adjudication, emphasizing the importance of considering the marketability of the sugar syrup in determining duty liability on intermediate goods.

This detailed analysis of the judgment showcases the key issues of waiver of pre-deposit of duty, the marketability of sugar syrup, and duty liability on intermediate goods, providing a comprehensive overview of the legal arguments and the Tribunal's decision in each aspect of the case.