2016 (9) TMI 678 - AT - Central Excise

Intermediate product - captive consumption - production of Sugar Syrup - marketability - The Sugar Syrup appeared classifiable under chapter sub-heading No. 17029090 is being consumed in the manufacture of exempted finished goods i.e. Biscuits of MRP below ₹ 100/- per kgs - Held that - neither there is any evidence to prove that the goods, in question, are classifiable under 17029090 nor there is any evidence to prove that the goods, in question, in form in which they come into existence in the appellants factories, are marketable - Decision in the case of M/s Rishi Bakers Pvt. Ltd. 2015 (4) TMI 893 - CESTAT NEW DELHI followed - Demand set aside - Decided in favor of assessee.

Issues Involved:

1. Classification and dutiability of Sugar Syrup.
2. Marketability of Sugar Syrup.
3. Applicability of Notification No. 67/95-CE and Notification No. 22/2007-CE.
4. Onus of proving marketability.
5. Penalty under Section 11AC and Rule 25 of Central Excise Rules, 2002.
6. Interest under Section 11AB and Section 11AA of Central Excise Act, 1944.
7. Reliance on previous Tribunal orders and Supreme Court rulings.

Detailed Analysis:

1. Classification and Dutiability of Sugar Syrup:
The Tribunal examined whether the sugar syrup manufactured by the appellant for captive use in the production of exempted biscuits is chargeable to Central Excise duty under sub-heading 17029090. The Department argued that since the sugar syrup is used in the manufacture of exempted biscuits, the benefit of Notification No. 67/95-CE would not be available. However, the Tribunal noted that the classification under sub-heading 17029090 requires the product to contain 50% by weight of fructose in dry state, which was not established by the Department.

2. Marketability of Sugar Syrup:
The appellant contended that the sugar syrup is not marketable as it is not sold or intended to be sold and is used only in the integrated process of biscuit manufacturing. The Tribunal cited the Supreme Court ruling in CCE Vs. MARKFED VANASPATI & ALLIED INDUS., which states that the onus of proving marketability lies with the Revenue. The Tribunal found that the Department failed to establish the marketability of the sugar syrup in the condition it emerges.

3. Applicability of Notification No. 67/95-CE and Notification No. 22/2007-CE:
The Tribunal discussed the applicability of Notification No. 67/95-CE, which exempts intermediate products used for captive consumption, and Notification No. 22/2007-CE, which exempts biscuits of MRP below ?100/- per kg. The Tribunal held that the benefit of Notification No. 67/95-CE is not available if the finished goods are exempted, as in this case.

4. Onus of Proving Marketability:
The Tribunal emphasized that the onus of proving the marketability of the sugar syrup lies with the Revenue. The Department did not provide any evidence to show that the sugar syrup is marketable in the condition it emerges, nor did they conduct any chemical tests to establish its classification under sub-heading 17029090.

5. Penalty under Section 11AC and Rule 25 of Central Excise Rules, 2002:
The Tribunal noted that the penalty imposed under Section 11AC and Rule 25 of Central Excise Rules, 2002, was unjustified as the Department failed to prove the marketability and correct classification of the sugar syrup. The Tribunal set aside the penalty.

6. Interest under Section 11AB and Section 11AA of Central Excise Act, 1944:
The Tribunal also set aside the demand for interest under Section 11AB and Section 11AA, as the primary duty demand was found to be unsustainable.

7. Reliance on Previous Tribunal Orders and Supreme Court Rulings:
The Tribunal relied on previous orders, including the Division Bench order in the case of M/s Rishi Bakers Pvt. Ltd., Kanpur, and Supreme Court rulings, to conclude that the sugar syrup is not marketable and not dutiable. The Tribunal highlighted that merely because an item is specified in the Central Excise Tariff, it does not mean it attracts excise duty unless its marketability is established.

Conclusion:
The Tribunal allowed the appeal, set aside the impugned order, and granted consequential relief to the appellant. The Tribunal reiterated the importance of proving marketability and correct classification for imposing excise duty and penalties.

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