Captive sugar syrup not dutiable absent proof of marketability in biscuit manufacture.

Sugar syrup arising during biscuit manufacture and consumed captively in the factory was treated as not liable to Central Excise duty because the department failed to show that the intermediate product was marketable in the form in which it emerged. The Tribunal also noted that the product was not shown to be classifiable and dutiable on the facts established. Applying its earlier coordinate bench view, it concluded that captively used sugar syrup could not be subjected to duty, and the proposed demand was not sustainable.

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Issues: Whether sugar syrup arising during the manufacture of biscuits and captively consumed in the factory was liable to Central Excise duty, particularly in the absence of evidence of marketability.

Analysis: The Tribunal followed its earlier coordinate bench view and noted that there was no evidence to establish that the sugar syrup, in the form in which it came into existence in the factory, was marketable. It was also found that the department had not shown that the intermediate product was classifiable and dutiable on the facts proved. On that basis, the Tribunal held that the intermediate sugar syrup used captively in biscuit manufacture could not be subjected to Central Excise duty.

Conclusion: The issue was decided in favour of the assessee, and the demand of Central Excise duty on captively consumed sugar syrup was not sustainable.

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