2017 (11) TMI 471 - AT - Central Excise

Benefit of N/N. 67/1995-CE dated 16/03/1995 - intermediate product namely sugar syrup (prepared within the factory, used in manufacture of biscuits) - Held that - the identical matter had come up before this Tribunal in the case of Lucky Biscuit Company vs. CCE, Patna 2017 (7) TMI 235 - CESTAT KOLKATA , where it was held that CBEC Circular dated 7.11.1994 relied upon by the lower authorities has been issued in respect of sugar syrup produced in the manufacture of aerated water and ayurvedic medicines. Hence, the same cannot be applied to the sugar syrup being produced for the biscuits without establishing that the two products are identical - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Classification of sugar syrup for captive use in the manufacture of exempted biscuits under central excise duty; applicability of Notification No.67/1995-CE dated 16/03/1995; marketability of the goods produced by the appellant.

Classification of sugar syrup under central excise duty:
The appellant, engaged in biscuit manufacturing, used sugar syrup prepared within their factory and claimed exemption under Notification No.67/1995-CE. The Department denied the exemption, leading to the present appeal. The Tribunal analyzed the issue of whether the sugar syrup made for captive use in manufacturing exempted biscuits is chargeable to central excise duty under sub-heading 17029090. It was noted that the lower authorities concluded the sugar content exceeded 80% without conducting a chemical test to ascertain the precise fructose content. The Tribunal emphasized that the classification as 'sugar syrup blend' in sub-heading 17029090 requires the product to contain 50% fructose by weight in the dry state. The appellant contended that the fructose content was below 50%, supported by a test report. The Tribunal held that without evidence confirming the fructose content, the classification under sub-heading 17029090 was unsustainable. The judgment highlighted that mere past duty payments under a particular classification did not imply acceptance that the goods conformed to that description. The importance of confirming marketability for attracting central excise duty was emphasized, with the Tribunal setting aside the impugned order due to lack of evidence supporting the classification and marketability.

Applicability of Notification No.67/1995-CE:
The appellant claimed exemption under Notification No.67/1995-CE dated 16/03/1995, which was denied by the Department. The Tribunal's analysis focused on the specific requirements for exemption under this notification concerning the manufacture of biscuits using sugar syrup. The judgment did not explicitly delve into the detailed provisions of the notification but considered the broader context of the appellant's claim for exemption in the manufacturing process. The Tribunal's decision to set aside the impugned order implied a lack of fulfillment of the conditions outlined in the notification, leading to the allowance of the appeal.

Marketability of the goods produced by the appellant:
The Tribunal examined the marketability of the goods produced by the appellant, emphasizing the necessity of establishing marketability in the condition in which the product emerges. The judgment referenced a case law precedent to highlight that marketability cannot be presumed solely based on the marketability of similar goods produced by another manufacturer unless the products are identical. The Tribunal criticized the basis on which the lower authorities deemed the goods marketable, highlighting the incorrect presumption of identity between the sugar syrup produced by the appellant and another product. The judgment stressed the need for a chemical test to ascertain whether a sugar syrup is ordinary or invert sugar syrup, emphasizing the incorrectness of presuming a given sugar syrup as invert sugar syrup without testing. The Tribunal concluded that there was no evidence to prove the marketability of the goods in question, further supporting the decision to set aside the impugned order based on the lack of evidence regarding marketability.

In conclusion, the judgment by the Appellate Tribunal CESTAT NEW DELHI addressed the issues of classification of sugar syrup under central excise duty, the applicability of Notification No.67/1995-CE, and the marketability of goods produced by the appellant. The decision highlighted the importance of evidence, chemical testing, and adherence to specific classification requirements and conditions for exemption. The detailed analysis provided clarity on the legal principles governing excise duty classification and marketability assessments in the context of biscuit manufacturing using sugar syrup.