2023 (11) TMI 147 - AT - Central Excise

Sugar syrup for biscuit manufacturing not excisable as intermediate goods under Nicholas Piramal precedent

Shiv Shakti Processed Foods Versus Commissioner of Central Excise, Pune – I

CESTAT Mumbai held that sugar syrup produced for manufacturing biscuits was not excisable as intermediate goods. The appellant supplied biscuits to a ... Excisability - intermediate goods - sugar syrup produced for use in manufacture of biscuits that were exempted from payment of duty - N/N. 67/95-CE dated 1st March 1995 - HELD THAT:-The appellant supplies ‘biscuits’ to M/s Parle Products Pvt Ltd and that ‘sugar syrup’ generated within the factory of the appellant is an essential ingredient in manufacture - The decision of the Hon’ble Supreme Court in NICHOLAS PIRAMAL INDIA LTD VERSUS CCE, MUMBAI [2010 (11) TMI 36 - SUPREME COURT], while elaborating upon ‘shelf-life’, has held that ‘marketability’ is a question of fact. The decision of the Tribunal in THE MAHARASHTRA AGRO INDUSTRIES DEVELOPMENT CORPORATION LTD., VERSUS COMMISSIONER OF CENTRAL EXCISE, NAGPUR [2017 (2) TMI 244 - CESTAT MUMBAI] relates to an entirely different product, viz. ‘sugar concentrate’, utilized in the manufacture of fruit juice. In terms of the above decision of the Tribunal on ‘sugar syrup’ deployed in identical circumstances for identical purpose would apply in full. Accordingly, the impugned order cannot sustain and is set aside to allow the appeal - Appeal allowed. Issues:The judgment involves the confirmation of demand under section 11A of Central Excise Act, 1944, excisability of 'sugar syrup' for use in biscuits manufacture, interpretation of 'marketability' for excisability, and imposition of penalty under CENVAT Credit Rules, 2002.Confirmation of Demand under Section 11A:The appeal challenges the demand of Rs. 13,61,293/- under section 11A of Central Excise Act, 1944, along with applicable interest under section 11AB, and imposition of penalty of Rs. 10,00,000/- under rule 25 of CENVAT Credit Rules, 2002. The issue pertains to the excisability of 'sugar syrup' produced for use in biscuits manufacture exempted from duty, requiring duties to be discharged on intermediate products. The appellant contends that 'sugar syrup' is not an intermediate product as it fails the test of 'marketability' due to its composition. The appellant relies on previous Tribunal decisions to support their contention. However, the Authorized Representative argues that 'sugar syrup' is marketable and excisable based on Supreme Court and Tribunal decisions.Excisability of 'Sugar Syrup' for Biscuits Manufacture:The primary contention is whether 'sugar syrup' is excisable for use in biscuits manufacture. The appellant argues that 'sugar syrup' is not excisable as it does not meet the 'marketability' criteria. They claim that the 'sugar syrup' is a necessary ingredient for biscuits and is produced within the factory through a specific process. The lower authorities, however, consider 'sugar syrup' as marketable and excisable based on its composition and purpose in the manufacturing process. The appellant's argument is supported by a test report regarding the 'fructose' content in the syrup.Interpretation of 'Marketability' for Excisability:The Tribunal analyzes the 'marketability' aspect of 'sugar syrup' to determine its excisability. The appellant argues that the 'sugar syrup' does not meet the requirements for excisability due to low 'fructose' content. The lower authorities, however, focus on the composition and shelf-life of the syrup to establish its marketability. The Tribunal finds that the 'sugar syrup' is essential for biscuits production and its properties have not been adequately considered in the previous findings. The decision emphasizes the importance of understanding the role of 'sugar syrup' in the manufacturing process to determine its excisability.Imposition of Penalty under CENVAT Credit Rules, 2002:The judgment also addresses the imposition of a penalty under CENVAT Credit Rules, 2002. The Tribunal sets aside the impugned order based on the findings related to the excisability of 'sugar syrup' in the context of biscuits manufacture. The decision highlights the lack of sufficient reasons to consider the 'sugar syrup' as excisable within the meaning of the Central Excise Act, 1944. Consequently, the penalty is not upheld, and the appeal is allowed.Separate Judgment by Judges:No separate judgment was delivered by the judges in this case.