Captive intermediate product must be proved marketable before excise duty can be levied on sugar invert syrup.

Sugar invert syrup used captively in biscuit manufacture was held not liable to central excise duty because marketability was not affirmatively proved. The Tribunal noted that biscuits were exempt under the relevant notifications and that the dispute concerned only the intermediate syrup produced and consumed within the same factory. As the department produced no test or evidence showing the syrup had a distinct dutiable character or marketability, the duty demand was unsustainable. Interest and penalty also could not be sustained on the same facts, and relief followed.

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Issues: Whether sugar invert syrup, being an intermediate product captively consumed in the manufacture of biscuits, was marketable and liable to central excise duty.

Analysis: The biscuits were exempted under the stated exemption notifications, and the dispute concerned only the dutyability of the sugar syrup manufactured within the factory and consumed in the same manufacturing process. The Tribunal noted that the same question had already been decided in earlier matters involving similar facts, where sugar syrup was held to be a non-marketable intermediate product not attracting duty. The department did not establish by any test or evidence that the syrup had marketability or a distinct dutiable character.

Conclusion: Sugar invert syrup was not shown to be marketable and could not be subjected to levy of duty; the demand was unsustainable and the assessee succeeded.

Final Conclusion: The duty demand, interest, and penalty could not be sustained on the facts found, and the assessee was entitled to the relief granted.

Ratio Decidendi: An intermediate product captively consumed is not liable to excise duty unless marketability is affirmatively established by evidence.

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