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2016 (9) TMI 678 - CESTAT ALLAHABAD

2016 (9) TMI 678 - CESTAT ALLAHABAD - TMI - Intermediate product - captive consumption - production of Sugar Syrup - marketability - The Sugar Syrup appeared classifiable under chapter sub-heading No. 17029090 is being consumed in the manufacture of exempted finished goods i.e. Biscuits of MRP below ₹ 100/- per kgs - Held that:- neither there is any evidence to prove that the goods, in question, are classifiable under 17029090 nor there is any evidence to prove that the goods, in question, .....

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Appellant: Shri R. Krishnan, Advocate Present for the Respondent: Shri S.J. Sahu (Assistant Commissioner) A.R. ORDER These nine appeals have been filed by Bhagwati Foods Pvt. Ltd. Sl. No. Appeal No. OIO No. Period Involved Amount Confirmed U/s 11A Penalty U/s 11 AC r/w Rule 25 Penalty U/Rule 26 1. 38-C.EX/ACK-II/13 Dt. 30.04.2013 1.4.2009 to 31.10.2009 376938 2. 39-C.EX/ACK-II/13 Dt. 30.04.2013 April, 2008 to Sep. 2008 459579 3. 40-C.EX/ACK-II/13 Dt. 30.04.2013 March 2008 to Nov. 2008 8396 8396 .....

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umar Gupta Authorised Signatory of M/s Bhagwati DO 0 200000 2. The brief facts of case are:- M/s Bhagwati Foods Pvt. Ltd, Kanpur (here-in-after referred to as the appellant), holder of Central Excise registration No. AABCB33680PXM003 are engaged in the manufacture of Biscuits of Tiger Brand and others for Britania Biscuits (here-in-after referred to as finished goods) ranging from ₹ 44/- per kgs. to ₹ 100/- per Kgs., falling under Chapter Sub Heading No. 19053120 of the Schedule to .....

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p (Intermediate Product). 4. Prior to 03.05.07, the finished goods i.e. biscuits being manufactured by the appellant were attracting Central Excise duty @ 8% advalorem and, therefore, the intermediate goods i.e. Sugar Syrup, was exempted from payment of Central Excise Duty in terms of Notification No. 67/1995-CE dated 16.03.1995 as amended. But w.e.f. o3.05.07, appellants finished goods i.e. Biscuits of MRP below ₹ 100/- per kgs has been exempted vide Notification No. 22/2007-CE dated 03. .....

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uring process. 6. To verify the facts, the officers of range visited on 27.03.2009 the factory premises and studied the manufacturing process involved in the factory and found that the Sugar Syrup (Sugar solution) is being manufactured. In this regard a panchnama dated 27.03.2009 was also drawn on the spot in the presence of Shri Sudhir Kumar Gupta, Authorized Signatory of the appellant and Shri Vipul Singh Chauhan, Production Incharge of the unit. 7. A statement dated 22.01.10 of Shri Vipul Sin .....

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e Sugar solution. He stated, further, that in 35 Kg of hot water at 100 degree C, 100 kgs. Sugar is added and stirred until it is completely dissolved. Thereafter 200 gm citric acid, an anti oxidant is mixed to it and then the solution is cooled and filtered and finally 102-104 Kg of Sugar Syrup is recovered. He further added that for the manufacture of 100 kgs, Biscuits, approx. 2.5 kgs. Sugar Syrup is used. 8. On perusal of ER-1 returns submitted by the party for the period Dec 10 to Sep 11, i .....

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ption of the intermediate goods (i.e. Sugar Syrup) in any of the ER-1. 9. Accordingly a show cause notice issued to the pray requiring them to show cause as to why:- (i) Central Excise duty amounting to ₹ 16,47,050/- (Cenvat duty ₹ 15,99,077.63/- + Edu. Cess ₹ 31,981.55/- + S & H Edu. Cess ₹ 15,990.77/-) should not be demanded and recovered from them under Section 11A(1) of Central Excise Act, 1944 on 612338.09 Kgs of Sugar Syrup consumed capitvely from Dec 10 to 11th .....

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discussed above. 10. The appellant contested the show cause notice and stated that they are engaged in the manufacture of biscuits and the process of manufacture involves preparation of sugar syrup. The syrup is captively consumed and used in the integrated process of manufacture and is not packed and removed from the production process line. At no point of time they had ever sold nor even intended to sell the sugar syrup. The sugar syrup by itself is not complete and finished product, so that i .....

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n it has been held that onus of proving marketability of the products is on the revenue and merely because an item is attracted to a tariff entry it cannot be taken that there was manufacture of excisable goods unless its marketability is also established. Reliance was placed upon the following Rulings also:- (a) UNION OF INDIA V. DELHI CLOTH & GENERALMILLS CO. LTD - 1997-92-ELT-315 (SC) The commodity which is sought to be subjected to excise duty must be a commodity which is marketable as i .....

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e judicially laid down guidelines are shown to be satisfied and therefore the duty demand is wholly unjustified in law. 12. They also stated that the Department has not even tested the sugar syrup, captively manufactured, in the Chemical Laboratory so as to hold that it satisfied the technical characteristics of sugar syrup falling under Chapter heading 1702. This was essential and statutorily required before alleging that the sugar syrup is dutiable. Therefore, the onus cast on the department h .....

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clearly bad in law. It is further submitted that in CCE V. Raptokos Brett & Co. Ltd., this Tribunal has clearly held that sugar syrup which comes into existence during the intermediate stage is not dutiable. 13. The ld. Commissioner confirmed the demand with equal amount of penalty and also interest. 14. Being aggrieved the appellant is before the Tribunal on among others the following grounds. (1) No. allegation/finding regarding contents of fructose as per tariff requirement. (2) There can .....

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the excise tariff, not pari material with HSN. (8) SSI exemption not considered (9) Levy of penalty under Rule 27 is unjustified 15. Heard the parties, I find that the issue in this appeal is squarely covered by the earlier order of Division Bench of this Tribunal, Final Order No.50759-50764/2015 dated 03.3.2015 where in under similar circumstances this Tribunal is held as follows:- 7. The dispute in the present case is as to whether sugar syrup made by the appellant for captive use in the manu .....

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able if a manufacturer discharges the obligation under Rule 6 of the Cenvat Credit Rules. We do not accept this plea, as in terms of proviso to Notification No. 67/95-CE, the full duty exemption to intermediate product is available under this notification, even if the manufacturer has manufactured, in addition to exempted final product, a dutiable final product also by using common Cenvat credit availed inputs and in respect of exempted final product, he has discharged the obligation prescribed .....

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duct, the obligation under Rule 6 of the Cenvat Credit Rules has been discharged. Shri Patil in this regard has cited the judgment of the Tribunal in the case of Sakthi Sugars Ltd. vs. CCE, Salem reported in 2008 (230) E.L.T. 676 (Tri. Chennai). We have gone through this judgment. In our view ratio of this judgment is not applicable to the facts of this case. 8. Next comes the question of classification. The Department has classified the product, in question, under sub-heading 17029090. Sub-head .....

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ea from the very beginning has been that the fructose sugar content is less than 50% and in this regard they have produced the test report of Shriram Institute of Industrial Research. It is seen that the Commissioner (Appeals) has not given any finding on this plea. Not only this, there is no evidence to show that before seeking classification of the 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 fruct .....

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i reported in 2004 (165) E.L.T. 129 (S.C.) has held that filing of classification list mistakenly does not mean that party has to pay duty, if in law, he is not bound to pay duty. Same view has been taken by the Apex Court in its judgment in the case of Bonanzo Engg. & Chemical P. Ltd. vs. CCE reported in 2012 (277) E.L.T. 145 (S.C.). In view of 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 .....

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dition in which it emerges. In this regard the Apex court in the case of Bata India Ltd. vs. CCE, New Delhi (supra) has held that the test of marketability is whether product is marketable in condition in which it emerges. In this regard the 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 .....

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rup being made by M/s Dhampur Speciality Sugars Ltd. for which there is no basis. Chemically, invert sugar is obtained by Hydrolysis of cane sugar (sucrose, a disaccharide with specific rotation of + 66.5?) and the same is a mixture of glucose (with specific rotation of +52.7?) and fructose (with specific rotation of - 92?), with net specific rotation of 19.7?. The process of hydrolysis of cane sugar (which is dextrorotatory i.e. with rotation of + 66.5?) is also called inversion, as the mixture .....

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