Marketability and tariff classification of captive sugar syrup failed for want of proof of fructose content and dutiability.

Sugar syrup captively consumed in biscuit manufacture was not shown to satisfy the tariff composition required for Chapter 1702, because the department produced no chemical test or other reliable evidence proving the prescribed fructose content. Marketability also could not be inferred from general references to invert sugar syrup or its use in confectionery and bakery products; it had to be established in the form in which the product emerged. As the department failed to discharge the burden of proving both classification and marketability, the intermediate product was not treated as dutiable and the excise demand, interest and penalty were set aside.

---

---

Issues: Whether the sugar syrup captively consumed in the manufacture of biscuits was marketable and classifiable so as to attract Central Excise duty, and whether the departmental demand could be sustained in the absence of evidence of fructose content and marketability.

Analysis: The duty demand rested on the premise that the sugar syrup answered Chapter 1702 of the Central Excise Tariff Act, 1985 and was therefore an excisable intermediate product. The Tribunal noted, however, that the relevant sub-heading invoked by the department required proof of the prescribed fructose content, and no chemical test or other reliable evidence had been produced to establish that composition. The Tribunal further held that marketability cannot be presumed on the basis of general references to invert sugar syrup or its use in confectionery and bakery products; it must be proved in the condition in which the product emerges. Following earlier decisions on sugar syrup manufactured as an intermediate product, the Tribunal held that the department had not discharged the burden of proving either the classification or the marketability of the product.

Conclusion: The sugar syrup was held not to be proved marketable or dutiable, and the demand of excise duty, interest and penalty was set aside in favour of the assessee.

---