Marketability test for intermediate goods: in-house sugar syrup used in biscuit manufacture was treated as non-excisable.

In-house sugar syrup used immediately in biscuit manufacture was treated as non-excisable because marketability and sufficient shelf-life were not established on the facts. The discussion applies section 2(d) of the Central Excise Act, 1944 and emphasises that an intermediate product becomes goods only if it has the attributes necessary for sale in the market, including stability and commercial utility. Earlier biscuit-manufacturing decisions were preferred over cases involving different products, and the absence of material rebutting the appellant's case meant the duty demand, interest and penalty could not be sustained.

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Issues: Whether sugar syrup produced in-house for use in biscuit manufacture was marketable and excisable as an intermediate product, so as to sustain the duty demand, interest and penalty.

Analysis: The dispute turned on whether the product had the attributes of marketability and shelf-life necessary to qualify as excisable goods under section 2(d) of the Central Excise Act, 1944. The product was generated within the factory for immediate use in biscuit manufacture, and the record did not contain any test material rebutting the appellant's case that the sugar syrup lacked the requisite fructose content and stability. The earlier tribunal decisions dealing with similar biscuit-manufacturing situations were treated as more apposite than the authorities relied on by the revenue, because the product and its use were materially different from sugar concentrate or other comparable goods.

Conclusion: Sugar syrup in the facts of the case was not held to be excisable, and the duty demand, interest and penalty could not be sustained.

Final Conclusion: The appeal succeeded and the impugned order was set aside.

Ratio Decidendi: An in-house product used as an intermediate input is not excisable unless it is shown, on the facts, to be marketable with sufficient shelf-life and other attributes establishing its status as goods under section 2(d) of the Central Excise Act, 1944.

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