Marketability of captive sugar syrup failed, so central excise duty could not be sustained under binding circulars.

Sugar syrup captively consumed within the factory was held not liable to central excise duty because marketability was not proved. The Tribunal relied on departmental circulars on sugar syrup, noting that the 3-7-1996 circular treated 65% sugar concentration as marketable, while later clarification stated that duty could arise only if marketability was otherwise established. As the product's sugar concentration was admittedly below 65% and the Revenue led no evidence of shelf life or other marketability conditions, the duty demand could not stand. CBEC circulars were treated as binding on the Revenue, and the impugned order was set aside.

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Issues: Whether sugar syrup manufactured and used captively within the factory was marketable and liable to central excise duty.

Analysis: The Tribunal considered the departmental circulars governing sugar syrup, including the 1989, 1994, 1996 and 2004 circulars. Under the circular dated 3-7-1996, sugar syrup having sugar concentration of 65% by weight was treated as marketable, and the later circular clarified that if marketability was otherwise established, duty could be attracted irrespective of sugar concentration. In the present case, the sugar concentration was admittedly below 65%. The Revenue produced no evidence to establish marketability or shelf life conditions bringing the product within the duty net. The Tribunal also noted that CBEC circulars are binding on the Revenue.

Conclusion: The sugar syrup was not shown to be marketable and was not liable to duty. The impugned order was set aside and the appeal was allowed in favour of the assessee.

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