Appellant's Sugar Syrup Deemed Non-Excisable: Appeal Allowed

The Tribunal held that the sugar syrup manufactured by the appellant was not marketable due to its low soluble solid content, rendering it non-excisable. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant, with consequential relief granted. The miscellaneous application for additional evidence was disposed of accordingly.

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Issues Involved:
1. Leviability of Central Excise duty on sugar syrup manufactured at an intermediate stage.
2. Marketability of the sugar syrup with less than 65% soluble solids.
3. Applicability of CBEC circulars and legal precedents.
4. Validity of the adjudicating authority's reliance on other manufacturers' practices.
5. Admissibility of additional evidence post-adjudication.

Detailed Analysis:

1. Leviability of Central Excise Duty on Sugar Syrup:
The appellant is engaged in manufacturing Pro-biotic Milk, which is exempt from duty. During an audit, it was observed that the appellant also manufactures and consumes sugar syrup captively, which is not exempt from duty. The exemption Notification No. 67/95-CE does not apply as the final product, Pro-biotic Milk, attracts a nil rate of duty. The sugar syrup, classifiable under Chapter heading 17029090, was deemed excisable based on its marketability.

2. Marketability of Sugar Syrup:
The appellant argued that the sugar syrup is not marketable as it contains only 52.9% soluble solids, below the 65% threshold required by the Food Safety and Standards Act, 2006. The CBEC Circular No.780/13/2004-CX clarified that sugar syrup is excisable if marketable, regardless of sugar concentration. The appellant presented test reports and a certificate from Dr. Gaba Food Consultancy Services, indicating that sugar solutions with less than 63.5% soluble solids are perishable and unfit for distribution and marketing.

3. Applicability of CBEC Circulars and Legal Precedents:
The appellant cited several CBEC circulars and legal precedents to support their claim that sugar syrup with less than 65% soluble solids is not marketable. Circular No.9/89 and Circular No.226/60/96-CE emphasized that sugar syrup must have a minimum of 65% soluble solids to be marketable. The Tribunal's decision in Cadbury India Limited Vs. Collector and Nicholas Piramal India Limited Vs. CCE highlighted the necessity of marketability for duty imposition.

4. Validity of Adjudicating Authority's Reliance on Other Manufacturers' Practices:
The adjudicating authority relied on practices of Rahul Sugar Products and Parle Biscuits Products, who paid duty on sugar syrup. However, the appellant contended that no test reports were provided to confirm the sugar content in those products. The reliance on these manufacturers was deemed irrelevant as it was not mentioned in the show cause notice, making the adjudicating authority's decision unsustainable.

5. Admissibility of Additional Evidence Post-Adjudication:
The appellant submitted a test report dated 18.07.2016, showing 51% soluble solids, after the adjudication order. The Tribunal discarded this evidence as it was post-adjudication and not admissible at this stage.

Conclusion:
The Tribunal concluded that the sugar syrup manufactured by the appellant is not marketable due to its low soluble solid content, making it non-excisable. The impugned order was set aside, and the appeal was allowed with consequential relief to the appellant. The miscellaneous application for additional evidence was disposed of accordingly.

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