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M/s Rishi Bakers Pvt. Ltd., Shri Prakash Chand Talreja, Director, M/s Ramakrishna Bakers Pvt. Ltd., Shri Rajiv Talreja, Director, M/s Swati Biscuit Manufacturing Co., Shri Om Prakash Shyamdasani, Partner Versus CCE & ST, Kanpur

2015 (4) TMI 893 - CESTAT NEW DELHI

Classification of goods - Marketability of product - Whether sugar syrup made by the appellant for captive use in the manufacture of exempted biscuits is chargeable to Central Excise duty under sub-heading 17029090 of the Central Excise Tariff - Held that:- Since the sugar syrup is used in the manufacture of the exempted biscuits, the benefit of Notification No. 67/95-CE would not be available. In this regard, the contention of the appellant is that in terms of the proviso to Notification No. 67 .....

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ng common Cenvat credit availed inputs, a manufacturer manufactures dutiable as well as exempted final product and in respect of the exempted final product, the obligation under Rule 6 of the Cenvat Credit Rules has been discharged.

For classification as sugar syrup blend in this sub-heading the product must contain 50% by weight of fructose sugar in dry state

There is no evidence to show that before seeking classification of the goods, in question, under sub-heading 17029 .....

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contain 50% by weight of fructose.

Marketability of the goods produced by a particular manufacturer cannot be presumed on the basis of the marketability of the similar goods in different condition being produced by another manufacturer, unless it shown that the two products are identical. In these cases, the Commissioner (Appeals) has held that the goods, in question, to be marketable only on the basis that the invert sugar syrup being manufactured by M/s Dhampur Speciality Sugars L .....

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nor there is any evidence to prove that the goods, in question, in form in which they come into existence in the appellant s factories, are marketable. We, therefore, hold that the impugned order is not sustainable. The same is set aside. - Decided in favour of assesees. - Excise Appeal Nos. 3725-3730 of 2012 - Final Order No. 50759-50764/2015 - Dated:- 3-3-2015 - Hon ble Shri Rakesh Kumar, Member (Technical) And Hon ble Shri S. K. Mohanty, Member (Judicial) ,JJ. For the Appellants : Shri M. H. .....

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v Talreja is the Director of M/s Ramakrishna Bakers Pvt. Ltd. and Shri Om Prakash Shyamdasani is the partner of M/s Swati Biscuit Manufacturing Co. The period of dispute in the appeal of M/s Rishi Bakers Pvt. Ltd. is from January 2009 to June 2009. The period of dispute in the case of appeal filed by M/s Ramakrishna Bakers Pvt. Ltd. is February 2010 to June 2010 and period of dispute in the case of M/s Swati Biscuit Manufacturing Co. is from January 2002 to June 2009. During this period, the bis .....

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biscuits. The Department was of the view that since biscuits of retail sale price equivalent not exceeding ₹ 100/- per kg. were fully exempt from duty, the benefit under exemption Notification No. 67/05-CE would not be admissible in respect of sugar syrup. The Department was also of the view that this sugar syrup is classifiable under sub-heading 17029090 and is also marketable. It is on this basis that show cause notices were issued for demand of duty in respect of clearances of the sugar .....

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order-in-appeal dated 25/3/10 and 26/3/10 dismissed the appeals. In the appeals filed before the Commissioner (Appeals), one of the pleas of the appellants was that the sugar syrup is not classifiable under heading 17029090 as, as per the test report of Shri Ram Institute of Industrial Research, the Fructose content of the syrup is less than 50% while for classification under sub-heading 17029090 the fructose content must be at least 50%, but this plea was not accepted. The appellant filed appe .....

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sumed on the basis of the marketability of the biscuits. 1.2 In denovo adjudication proceedings, the original Adjudicating Authority again confirmed the duty demands holding that the sugar syrup, in question, is marketable and also held that the goods, in question, are classifiable under sub-heading 17029090. 1.3 On appeals have filed to Commissioner (Appeals) against these orders, the Commissioner (Appeals) by a common order-in-appeal dated 30th August 2012 dismissed the appeals. Against this o .....

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f duty demand confirmed, interest and penalty by the appellant companies and the requirement of pre-deposit of penalty by the Directors/Partner of the appellant company/firm would stand waived and its recovery stayed during the pendency of the appeals. The appellant, thereafter, complied with this stay order. 1.4 Subsequently, the Tribunal vide stay order dated 4th February 2014 extended the stay order against which the Department filed appeal before Hon ble Allahabad High Court. Hon ble Allahab .....

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at the product, in question, is invert sugar syrup and is classifiable under heading 17029090, that not only in the appeals before the Tribunal, but also in the appeals filed before the Commissioner (Appeals), the question of classification of the goods, in question, under the sub-heading 17029090 has been disputed by pleading that the fructose content of the sugar syrup is less than 50% and in this regard reliance has been placed on the test report of Shri Ram Institute of Industrial Research, .....

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Britannia Industries, M/s J.B. Mangaram Food Industries and M/s ITC Ltd. which is wrong, as the Tribunal in the remand order had directed original Adjudicating Authority to ascertain the marketability of the sugar syrup being prepared by the appellant and the marketability of the sugar syrup, in question, cannot be presumed on the basis of marketability of the invert sugar syrup being manufactured and sold by others, that when the sugar syrup is not marketable, there is no question of its excis .....

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ellants have not taken Cenvat credit in respect of the inputs used in the manufacture of exempted biscuits and hence in respect of the sugar syrup, the exemption under this notification would be available and that in view of the above submissions, the impugned orders are not sustainable. Shri Patil also pleaded that since the dispute in this case pertains to interpretation, the penalty on the appellant company as well as on Director was not called for, as earlier, the appellant were paying duty .....

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dustries, M/s J.B. Mangaram Food Industries and M/s ITC Ltd., the goods, in question, have to be treated as marketable. Shri Grover cited the judgments of Nicholas Piramal India Ltd. vs. CCE, Mumbai reported in 2010 (260) E.L.T. 338 (S.C.), wherein it was held that shelf-life of product is not a relevant factor to test marketability unless it is shown that product has absolutely no shelf-life or shelf-life is such that it is not capable of being bought or sold during that shelf-life and also in .....

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S.C.). He therefore pleaded that the sale of invert sugar syrup by Dhampur Speciality Sugars Ltd. to M/s Britannia Industries, M/s J.B. Mangaram Food Industries and M/s ITC Ltd. shows that this sugar syrup, in question, is marketable. 5. In rejoinder Shri M.H. Patil cited the judgment of the Apex court in the case of Bata India Ltd. vs. CCE, New Delhi reported in 2010 (252) E.L.T. 492 (S.C.) and pointed out to para 18 of the judgment wherein it has been held that test of marketability is that th .....

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sides and perused the records. 7. The dispute in the present case is as to whether sugar syrup made by the appellant for captive use in the manufacture of exempted biscuits is chargeable to Central Excise duty under sub-heading 17029090 of the Central Excise Tariff. The Department s contention is that since the sugar syrup is used in the manufacture of the exempted biscuits, the benefit of Notification No. 67/95-CE would not be available. In this regard, the contention of the appellant is that .....

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l product also by using common Cenvat credit availed inputs and in respect of exempted final product, he has discharged the obligation prescribed under Rule 6 of the Cenvat Credit Rules. In this case, it is now known as to whether the appellant throughout during the period of dispute, were manufacturing only exempted final product or alongwith the exempted final product were also manufacturing dutiable final product. The proviso to notification is applicable only in a situation where by using co .....

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s case. 8. Next comes the question of classification. The Department has classified the product, in question, under sub-heading 17029090. Sub-heading 17029090 comes under the 6 digit sub-heading 170290 which covers other sugars including invert sugar and sugar syrup blends containing in the dry stage 50% by weight of fructose . The goods, in question, are sought to be classified under 17029090 as sugar syrup blends containing in dry stage, 50% by weight of fructose . In our view for classificati .....

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e goods, in question, under sub-heading 17029090, the samples drawn from the goods had been got tested by the CRCL to confirm as to whether the fructose content of the goods, in question, in dry stage is 50% by weight. Just because the appellant during period till June 2008 were paying duty on the goods by classifying the same under sub-heading 17029090, it cannot be presumed that they had accepted that the goods, in question, conform to the description of sugar syrup blends of sub-heading 17029 .....

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this, we hold that the classification of the goods under sub-heading 17029090 is not sustainable, as absolutely no evidence has been produced by the Department to show that the fructose content of the goods, in question, in dry state was 50%. 9. Even if it is assumed that the goods, in question, are covered by sub-heading 17029090, for attracting Central Excise duty the goods must be proved to be marketable. The Tribunal had remanded this matter to Commissioner (Appeals) for examining the quest .....

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tability of the similar goods in different condition being produced by another manufacturer, unless it shown that the two products are identical. In these cases, the Commissioner (Appeals) has held that the goods, in question, to be marketable only on the basis that the invert sugar syrup being manufactured by M/s Dhampur Speciality Sugars Ltd. is being sold to M/s Britannia Industries, M/s J.B. Mangaram Food Industries and M/s ITC Ltd. In our view this basis of holding that the goods, in questi .....

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