Marketability test for captive intermediate goods: sugar syrup used in biscuit manufacture was found not dutiable under Central Excise

Sugar syrup generated during biscuit manufacture and captively consumed in the factory was treated as not liable to Central Excise duty because the available record did not show that the intermediate product was classifiable under the asserted tariff entry or marketable in the form in which it emerged. The Tribunal applied its earlier coordinate-bench view and held that, absent proof of marketability, the intermediate goods could not be subjected to duty. The appeal was allowed.

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Issues: Whether sugar syrup emerging during the manufacture of biscuits and captively consumed in the factory was marketable and therefore liable to Central Excise duty.

Analysis: The Tribunal followed its earlier coordinate-bench view that, on the material available, there was no evidence to show that the sugar syrup was classifiable as the alleged tariff item or that it was marketable in the form in which it came into existence in the factory. On that basis, the intermediate product was treated as not attracting Central Excise duty.

Conclusion: Sugar syrup captively consumed in biscuit manufacture was held not liable to Central Excise duty for want of evidence of marketability, and the appeal was allowed.

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