The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the demand of duty on the ground of the manufacturing of sugar syrup was not marketable and not liable to pay duty.
Patwari Bakers Pvt. Ltd, the appellant assessee was engaged in the manufacture of Biscuits on a job work basis to M/s. Parle Products Pvt. Ltd and during manufacture, the assessee was also manufacturing sugar syrup as an intermediate product, and was captively consumed in the manufacture of final products i.e. Biscuits.
The assessee appealed against the order passed by the adjudicating authority for imposing interest and penalty for not paying duty to the manufacturer of sugar syrup.
Jatin Mahajan, the counsel for the assessee contended that for the manufacture of biscuits, they prepare sugar syrup inside the factory by adding sugar with water and a small amount of citric acid which was heated to make a mixture and submitted that sugar syrup was not marketable was not eligible to excise duty.
Further contended that the department had not furnished any evidence to show that sugar syrup manufactured by the assessee was a marketable product. Thus the order passed by the adjudicating authority was not as per the law and was liable to be deleted.
R. Rajaraman, the counsel for the department relied on the decisions made by the adjudicating authority and contended that the sugar being marketable and having shelf-life due to adding of citric acid was excisable and that assessee was liable to pay duty on such intermediate products.
The bench observed that the sugar syrup prepared inside the factory was subject to a levy of excise duty as an intermediate product and it was not a marketable product, the assessee was not liable to pay the duty.
The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) quashed the demand of duty passed by the adjudicating authority while allowing the appeal filed by the assessee.
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