Tribunal sets aside excise duty demand on sugar syrup due to lack of evidence; compliance with exemption notification upheld.

The Tribunal allowed the appeals, setting aside the demand for excise duty on sugar syrup by finding insufficient evidence of marketability and fructose content below the required threshold of 50%. The appellants' compliance with exemption notification conditions under notification 67/1995-CE was upheld, leading to the dismissal of the demand based on the exemption provision.

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Issues:
Classification of sugar syrup for excise duty, applicability of exemption notification, marketability of sugar syrup, fructose content testing.

Classification of Sugar Syrup for Excise Duty:
The appellants, engaged in biscuit manufacturing, contested the demand for excise duty on sugar syrup, an intermediate product. The department argued that since final products were exempt, the sugar syrup should be chargeable. The appellants relied on case laws and argued that the demand was not sustainable due to the syrup's short shelf life. They also disputed the classification under chapter heading 1702 9090, citing lack of fructose content testing. The Tribunal found insufficient evidence of marketability and fructose content below 50%, making classification under 1702 9090 invalid.

Applicability of Exemption Notification:
The appellants invoked notification 67/1995-CE, which exempts intermediate products if final products are exempt and certain conditions are met. They argued that by complying with Rule 6 of Cenvat credit rules, they were covered by the exemption, even if the sugar syrup was marketable and classifiable under 1702 9090. The Tribunal agreed, setting aside the demand based on the exemption provision.

Marketability of Sugar Syrup:
The Tribunal noted the absence of evidence supporting the marketability of the sugar syrup manufactured by the appellants. Without proof of marketability, the demand for excise duty on the sugar syrup was deemed unsustainable.

Fructose Content Testing:
Regarding the classification under chapter heading 1702 9090, the Tribunal emphasized the requirement of at least 50% fructose content by weight for excisability. As the fructose content in the appellants' syrup was below 50%, the demand based on this classification ground was dismissed.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned orders and providing consequential relief. The decision was based on the lack of evidence of marketability, fructose content below the required threshold, and the appellants' compliance with the exemption notification conditions.

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