Excisability and marketability of biscuit ingredients determine excise duty demand; sugar syrup failed classification proof, cream issue was remanded.

Excise duty on sugar syrup used in biscuit manufacture failed because the record did not establish the fructose content needed for the tariff classification adopted by the department, and there was no reliable test evidence that the product matched the described excisable item. On cream, the demand could not be sustained without first examining whether the product, in the condition in which it emerged, was marketable. The tribunal therefore set aside the demand on sugar syrup and remanded the cream issue for de novo consideration on marketability after hearing the assessee and allowing fresh evidence if necessary.

---

---

Issues: (i) Whether sugar syrup used in the manufacture of biscuits was liable to central excise duty and correctly classifiable so as to attract duty; (ii) Whether the demand on cream could be sustained without an examination of marketability.

Issue (i): Whether sugar syrup used in the manufacture of biscuits was liable to central excise duty and correctly classifiable so as to attract duty.

Analysis: The claim of duty was examined against the exemption claimed for the final biscuits and the departmental case that the sugar syrup fell under the specified tariff entry. The record did not establish that the syrup contained the requisite fructose content for the classification adopted by the department. It was also found that there was no reliable test evidence to show that the product, in the form in which it emerged, answered the description relied upon by the department. On the issue of excisability, the earlier tribunal view relied upon held that duty could not be sustained in the absence of proof of correct classification and marketability.

Conclusion: The demand on sugar syrup was not sustainable and that part of the impugned order was set aside in favour of the assessee.

Issue (ii): Whether the demand on cream could be sustained without an examination of marketability.

Analysis: The cream dispute turned on the settled test of marketability. The lower authority had not examined whether the cream, as manufactured and in the condition in which it came into existence, was marketable. In the absence of such an inquiry, the duty demand could not be finally affirmed. The matter therefore required a fresh determination on the marketability test after giving the assessee an opportunity of hearing and permitting fresh evidence, if necessary.

Conclusion: The demand on cream was set aside and the issue was remanded for de novo consideration in favour of the assessee.

Final Conclusion: The assessee succeeded on the duty demand relating to sugar syrup and obtained remand on the cream issue, resulting in partial relief.

Ratio Decidendi: Excise duty cannot be sustained unless the department establishes the correct tariff classification and marketability of the product in the condition in which it emerges; where such proof is absent, the demand fails and the matter may require fresh adjudication on marketability.

---