In Excise Appeal No. 40607 of 2013 -CESTAT- CESTAT (Chennai) rules ‘Sugar Syrup’ produced by Patwari Bakers in their factory exempt from Excise Duty, being non-marketable product
Members Sulekha Beevi C.S. (Judicial) & Vasa Seshagiri Rao (Technical) [11-07-2023]

Read Order: Patwari Bakers Pvt. Ltd v. Commissioner of Central Excise

Chahat Varma

New Delhi, July 19, 2023: The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal has ruled in favour of Patwari Bakers Pvt. Ltd. (appellant), holding that sugar syrup produced by the appellant in their factory should not be subjected to excise duty. The determining factor in this decision was that the sugar syrup was not considered a marketable product.

Briefly, the facts of the case were that the appellant was engaged in the manufacture of biscuits on job work basis to M/s. Parle Products Pvt. Ltd. In the course of manufacturing, the appellant also manufactured sugar syrup (falling under subheading 1702 9090 of the Chapter) as an intermediate product. The said sugar syrup was captively consumed in the manufacture of final products, i.e., biscuits. The intermediate product, i.e., sugar syrup, was manufactured using inputs such as sugar, water and citric acid. The appellant did not pay duty on the sugar syrup, as it was consumed captively.  The Department contended that the sugar syrup, which was marketable and having shelf-life, due to the addition of citric acid, was excisable and the appellant was liable to pay duty on such intermediate products. Thus, a show cause notice was issued, proposing to demand the duty along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand along with interest and imposed penalties.

The two-member bench of Sulekha Beevi C.S. (Judicial) and Vasa Seshagiri Rao (Technical) noted that the matter at hand had already been addressed and resolved in Rishi Bakers Pvt. Ltd v. Commissioner of C. Ex. & S.T., Kanpur [LQ/CESTAT/2015/99]. In that case, the Tribunal had rejected the department's argument that sugar syrup was considered marketable and, consequently, subject to the imposition of excise duty.

The bench expressed its opinion that the department had failed to provide any evidence to support their claim that the sugar syrup was a marketable product. As a result, the bench concluded that the demand for excise duty on the sugar syrup could not be upheld.