Marketability of intermediate sugar syrup controlled excisability, while absence of wilful suppression defeated the extended limitation period.

Intermediate sugar syrup was treated as not marketable on the record, so it was not excisable merely because it emerged during manufacture. The absence of proof of marketability was decisive. On limitation, the extended period could not be invoked because wilful suppression with intent to evade duty was not established, particularly where the excisability of sugar syrup had itself been controversial and subject to departmental circulars. The assessee therefore retained relief on both the merits of excisability and the limitation objection.

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Issues: (i) Whether the intermediate sugar syrup was marketable and consequently excisable under Chapter Heading 1702.30 of the Central Excise Tariff Act, 1985; (ii) Whether the demand for the earlier period was barred by limitation on the ground that suppression with intent to evade duty was not established.

Issue (i): Whether the intermediate sugar syrup was marketable and consequently excisable under Chapter Heading 1702.30 of the Central Excise Tariff Act, 1985.

Analysis: The product came into existence only at an intermediate stage and contained ingredients apart from sugar and water. The record did not establish that it was a marketable product, and marketability remained unproved. A product that is not marketable does not become excisable merely because it emerges during manufacture.

Conclusion: The intermediate sugar syrup was held to be not marketable and therefore not excisable.

Issue (ii): Whether the demand for the earlier period was barred by limitation on the ground that suppression with intent to evade duty was not established.

Analysis: The dispute covered a period when the excisability and marketability of sugar syrup had been a matter of controversy and departmental circulars had been issued on the subject. On those facts, mere non-payment of duty or inaction could not be treated as wilful suppression with intent to evade duty so as to justify the extended period.

Conclusion: The demand for the earlier period was held to be barred by limitation.

Final Conclusion: The appeal failed on both the merits of excisability and the plea of limitation, leaving the assessee's relief intact.

Ratio Decidendi: An intermediate product is not dutiable unless the Department proves marketability, and the extended period of limitation cannot be invoked in the absence of established wilful suppression with intent to evade duty.

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