2017 (11) TMI 693 - AT - Central Excise

N/N. 67/1995-CE - intermediate goods - captive consumption - sugar syrup - Held that - Co-ordinate Bench in the case of Rishi Bakers Pvt. Ltd., Kanpur 2015 (4) TMI 893 - CESTAT NEW DELHI held that there was no evidence to prove that sugar syrup captively consumed is classifiable under Tariff Item No.17029090, nor there is any evidence to prove that the goods in question, in the form in which they come into existence in the appellants factory, are marketable. Sugar syrup coming into existence during manufacture of biscuits and captively consumed, does not attract Central Excise duty for the reason that there is no evidence that the same is marketable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of sugar syrup for Central Excise Duty.
2. Applicability of Notifications on intermediate products.
3. Cenvat Credit on inputs.
4. Marketability of sugar syrup for Central Excise duty.

Classification of sugar syrup for Central Excise Duty:
The case involved the classification of sugar syrup used in the manufacture of biscuits for Central Excise Duty. The Revenue contended that the sugar syrup fell under Tariff Item No. 17029090. Initially, the final products attracted Central Excise Duty at 8%, exempting the intermediate products under Notification No.67/1995-CE. However, a subsequent notification exempted goods with an MRP below ?100 per kg, rendering the benefit of the earlier notification on sugar syrup as an intermediate product inapplicable. Show cause notices were issued demanding Central Excise duty on the sugar syrup captively consumed in biscuit manufacturing. The Orders-in-Original confirmed the demands, leading to appeals before the Commissioner (Appeals).

Applicability of Notifications on intermediate products:
The Commissioner (Appeals) upheld the Orders-in-Original but remanded the case to allow Cenvat Credit on inputs and recalculate the demand, interest, and penalty. The appellant argued that previous Tribunal orders, including one related to M/s Bhagwati Food Pvt. Ltd., had set a precedent favoring the assessee. The learned AR agreed that the present appeals aligned with the Tribunal's previous rulings, particularly concerning the case of M/s Bhagwati Food Pvt. Ltd.

Cenvat Credit on inputs:
The issue of Cenvat Credit on inputs arose during the proceedings. The Commissioner (Appeals) directed to allow Cenvat Credit on inputs and recalculate the financial aspects of the case. The Tribunal considered the submissions from both sides and noted the reliance on a Coordinate Bench decision in the case of Rishi Bakers Pvt. Ltd., Kanpur, which emphasized the lack of evidence to classify captively consumed sugar syrup under a specific Tariff Item. The Tribunal ultimately allowed the appeals, ruling that the sugar syrup, being captively consumed and lacking evidence of marketability, did not attract Central Excise duty.

Marketability of sugar syrup for Central Excise duty:
The Tribunal's decision hinged on the marketability of sugar syrup during the biscuit manufacturing process. Citing the lack of evidence to prove that the sugar syrup was marketable or classifiable under a specific Tariff Item, the Tribunal concluded that the sugar syrup, when captively consumed in biscuit production, did not attract Central Excise duty. The Tribunal allowed all the appeals, granting the appellants consequential benefits as per the law.

This comprehensive analysis of the judgment addresses the key issues involved in the case, providing a detailed overview of the legal proceedings and the Tribunal's final decision.