Tribunal rules wet starch not marketable during sago production, sets aside excise duty demand

The Tribunal set aside the excise duty liability demand on wet starch, ruling that wet starch is not marketable during sago production. The decision was based on the lack of evidence supporting the Revenue's claim that wet starch can be marketed after reducing moisture content. Additionally, the Tribunal found that the starch slurry is not capable of being marketed due to its crude form and lack of evidence showing its production during sago manufacturing. Consequently, the appeal was allowed, and the impugned order was deemed unsustainable.

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Issues:
The judgment involves the issue of excise duty liability on wet starch, marketability of starch slurry, and the manufacturing process of sago.

Excise Duty Liability on Wet Starch:
The appellant appealed against the confirmed demand on wet starch, arguing that the final product sago is exempt from excise duty, while wet starch is an intermediate product. The Revenue contended that wet starch is liable for excise duty as it can be marketed after reducing moisture content. The appellant cited a laboratory report stating the spoilage of wet starch sample, and previous decisions where similar demands were dropped. The Tribunal found no evidence that wet starch is marketable during sago production, thus setting aside the demand.

Marketability of Starch Slurry:
The Commissioner (Appeals) previously dropped a demand on starch slurry, ruling it as not marketable due to its crude form and fermentation susceptibility. The Revenue argued that starch slurry can be marketed after reducing moisture content, supported by a report on shelf-life. However, the Tribunal noted the absence of evidence showing the production of marketable wet starch during sago manufacturing, leading to the decision that the starch slurry is not capable of being marketed.

Manufacturing Process of Sago:
The appellant explained the continuous manufacturing process of sago from tapioca, detailing the steps involved in obtaining starch slurry and forming sago globules. The Tribunal acknowledged the manufacturing process and the lack of evidence supporting the Revenue's claim that wet starch is produced during sago manufacturing. As the starch slurry was deemed not marketable, the impugned order was found unsustainable and set aside, resulting in the allowance of the appeal.

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