Marketability of intermediate sugar syrup must be proved before excise duty, with exemption claim also examined on remand.

An intermediate sugar syrup arising in biscuit manufacture can attract central excise duty only if its marketability and shelf life are established on product-specific evidence. The Tribunal noted that the lower authorities had not properly examined the syrup's composition, stability or the Board circular on sugar solution and shelf life, so duty liability could not be sustained without fresh factual enquiry. It also held that the amended exemption notification applicable from 12.09.2011 had direct relevance for the post-amendment period and had to be considered alongside marketability. The matter was therefore remanded for reconsideration of both the duty issue and the exemption claim.

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Issues: (i) whether the intermediate sugar syrup emerging during manufacture of biscuits was liable to central excise duty, in view of its alleged marketability and shelf life; and (ii) whether the amended exemption notification applicable from 12.09.2011 required reconsideration for the post-amendment period.

Issue (i): whether the intermediate sugar syrup emerging during manufacture of biscuits was liable to central excise duty, in view of its alleged marketability and shelf life.

Analysis: Liability to duty on an intermediate product depends upon its excisability, including whether it is marketable and has a shelf life capable of being established on the record. The adjudicating authority and the first appellate authority had proceeded without a proper examination of the product-specific facts, including the composition, stability and shelf life of the sugar syrup, and without adequate material to conclude marketability. The Tribunal held that the question had to be decided by analysing the evidence and the Board circular dealing with sugar solution and shelf life, rather than by assumption.

Conclusion: The finding of duty liability on the sugar syrup was not sustained and the issue required fresh adjudication.

Issue (ii): whether the amended exemption notification applicable from 12.09.2011 required reconsideration for the post-amendment period.

Analysis: The amended notification relied upon by the assessee was not examined by the lower authorities, though it had a direct bearing on the duty position for the period after 12.09.2011. The Tribunal allowed the assessee to raise this ground and held that the applicability of the amended notification had to be considered along with the marketability issue on remand.

Conclusion: The applicability of the amended exemption for the post-12.09.2011 period was left for reconsideration by the adjudicating authority.

Final Conclusion: The matter was sent back for fresh decision on marketability and the amended exemption, with the assessee succeeding in obtaining remand rather than a final merits determination.

Ratio Decidendi: An intermediate product can be subjected to excise duty only if its marketability is established on evidence relevant to the product's actual characteristics, and any materially relevant exemption claim must be examined before fastening liability.

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