Tribunal allows appeal, sets aside order due to lack of proof on marketability for excise duty.

The tribunal allowed the appeal, setting aside the Order-In-Appeal, as the department failed to prove the marketability of the "Sugar syrup" intermediate product. Citing past decisions emphasizing the necessity of establishing marketability for levying excise duty, the tribunal held the department's order as unsustainable.

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Issues involved:
The issues involved in the judgment are whether the appellant is liable to pay central excise duty on the intermediate product "Sugar syrup" manufactured for captive consumption in the further manufacture of lower priced biscuits exempted from duty, and whether the "Sugar syrup" is a marketable commodity as per Section 3 of the Central Excise Act, 1944.

Issue 1: Liability to pay central excise duty on "Sugar syrup":
The appellant, engaged in manufacturing biscuits for M/s. ITC Ltd., was asked to pay central excise duty on the intermediate product "Sugar syrup" by the department. The department contended that since the final product (biscuits) was exempt from duty, duty was payable on the intermediate product. The appellant argued that the "Sugar syrup" did not satisfy the marketability condition under Section 3 of the Central Excise Act, 1944. The department issued a show cause notice for duty payment, which was confirmed in the Order-In-Original. The appellant's appeal to the Commissioner (Appeals) was unsuccessful, leading to the current appeal before the tribunal.

Issue 2: Marketability of "Sugar syrup" and applicability of past decisions:
The appellant contended that the "Sugar syrup" did not meet the marketability requirement under Section 3 of the Central Excise Act, 1944. They argued that the product was not commercially marketable in the condition it emerged during the manufacturing process. The tribunal noted that the department failed to provide evidence of marketability. The tribunal referenced past decisions, including M/s. DISHA FOODS PVT. LTD. and LUCKY BISCUITS COMPANY, where it was held that marketability must be established for a product to be subject to excise duty. These decisions emphasized the need for chemical tests to determine the fructose content in the product and the importance of proving marketability in the condition in which the product emerges.

Conclusion:
The tribunal found that the department did not present evidence to prove the marketability of the "Sugar syrup" intermediate product. Citing past decisions and the requirement for marketability to levy excise duty, the tribunal held that the Order-In-Appeal was unsustainable. Therefore, the appeal by the appellant was allowed, and the Order-In-Appeal was set aside. The tribunal's decision was pronounced in the open court on 20.04.2023.

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