Marketability and exemption for captive sugar syrup failed duty demand and consequential penalties under excise law.

Sugar syrup manufactured in-house and captively consumed in biscuit production was held not liable to central excise duty because the department failed to prove, by chemical testing, that it matched the alleged tariff description. The Tribunal reiterated that marketability must be established in the condition in which the product emerges, and cannot be inferred merely from sales of similar goods by another manufacturer. On that basis, denial of exemption under Notification No. 67/95 was unsustainable, and the connected penalties, being consequential to the duty demand, also could not survive.

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Issues: Whether sugar syrup manufactured in-house and used captively in the manufacture of biscuits was liable to central excise duty and whether the connected penalties could survive.

Analysis: The Tribunal followed its earlier decisions on identical facts and held that the department had not established by chemical testing that the sugar syrup answered the alleged tariff description. It also held that marketability must be proved in the condition in which the product emerges, and could not be presumed merely because similar goods of another manufacturer were sold in the market. On that basis, the denial of exemption under Notification No. 67/95 was not sustainable, and the penalties, being consequential to the duty demand, could not stand once the demand itself failed.

Conclusion: The duty demand was not sustainable and the assessee was entitled to exemption and consequential relief, while the departmental appeal against deletion of penalties also failed.

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