Marketability controls excise duty on captively consumed sugar syrup where no evidence proved a marketable intermediate product

An intermediate sugar syrup used captively in biscuit manufacture was treated as not liable to central excise duty because no evidence showed that it was marketable. The Tribunal followed earlier coordinate-bench reasoning that excisability of an intermediate product depends on proof that it comes into existence in a marketable form, and that marketability must be established by evidence. On that basis, the captively consumed syrup was held outside duty, with the issue decided in favour of the assessee and against the Revenue.

---

---

Issues: Whether sugar syrup arising in the manufacture of biscuits and captively consumed within the factory was marketable so as to attract central excise duty.

Analysis: The Tribunal followed the earlier coordinate-bench view that no evidence had been produced to show that the sugar syrup emerging in the factory answered the test of marketability or that it was dutiable as such. The earlier decision had also rejected the claim of excisability of the intermediate product in the absence of proof that the goods came into existence in a marketable form. On the same reasoning, the Tribunal held that the captively consumed sugar syrup in the present case did not attract central excise duty.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Ratio Decidendi: An intermediate product used captively is not liable to central excise duty unless marketability is shown by evidence.

---