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2023 (4) TMI 1071 - AT - Central ExciseLevy of Excise duty - intermediate excisable goods (Sugar syrup) which emerges during the process of manufacture of biscuits - demand on the ground that final product i.e. biscuits are exempted from Central Excise Duty - HELD THAT - The department has not come up with any evidence to prove that the Sugar Solution arising at the intermediate stage in the course of manufacturing of biscuits is marketable. In the absence of any such evidence and considering the fact that the condition in which sugar solution emerges has very short life and thus not marketable in the condition in which it emerges during process of manufacture. This issue has been settled by this tribunal in catena of decisions - reliance can be placed in the case of M/S DISHA FOODS PVT LTD, M/S ANAND FOOD PRODUCTS PVT LTD VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE SERVICE TAX, HYDERABAD - II 2019 (7) TMI 1462 - CESTAT HYDERABAD where it was held that There are no sufficient evidence to show that the sugar syrup manufactured by appellant is a marketable commodity. In the case of M/S. LUCKY BISCUIT COMPANY VERSUS COMMISSIONER OF CENTRAL EXCISE, PATNA 2017 (7) TMI 235 - CESTAT KOLKATA 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. Since, the facts of the matter at hand are similar to one which have been cited, the same is followed and it is held that the impugned Order-In-Appeal is not sustainable - appeal allowed.
Issues involved:
The issues involved in the judgment are whether the appellant is liable to pay central excise duty on the intermediate product "Sugar syrup" manufactured for captive consumption in the further manufacture of lower priced biscuits exempted from duty, and whether the "Sugar syrup" is a marketable commodity as per Section 3 of the Central Excise Act, 1944. Issue 1: Liability to pay central excise duty on "Sugar syrup": The appellant, engaged in manufacturing biscuits for M/s. ITC Ltd., was asked to pay central excise duty on the intermediate product "Sugar syrup" by the department. The department contended that since the final product (biscuits) was exempt from duty, duty was payable on the intermediate product. The appellant argued that the "Sugar syrup" did not satisfy the marketability condition under Section 3 of the Central Excise Act, 1944. The department issued a show cause notice for duty payment, which was confirmed in the Order-In-Original. The appellant's appeal to the Commissioner (Appeals) was unsuccessful, leading to the current appeal before the tribunal. Issue 2: Marketability of "Sugar syrup" and applicability of past decisions: The appellant contended that the "Sugar syrup" did not meet the marketability requirement under Section 3 of the Central Excise Act, 1944. They argued that the product was not commercially marketable in the condition it emerged during the manufacturing process. The tribunal noted that the department failed to provide evidence of marketability. The tribunal referenced past decisions, including M/s. DISHA FOODS PVT. LTD. and LUCKY BISCUITS COMPANY, where it was held that marketability must be established for a product to be subject to excise duty. These decisions emphasized the need for chemical tests to determine the fructose content in the product and the importance of proving marketability in the condition in which the product emerges. Conclusion: The tribunal found that the department did not present evidence to prove the marketability of the "Sugar syrup" intermediate product. Citing past decisions and the requirement for marketability to levy excise duty, the tribunal held that the Order-In-Appeal was unsustainable. Therefore, the appeal by the appellant was allowed, and the Order-In-Appeal was set aside. The tribunal's decision was pronounced in the open court on 20.04.2023.
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