Utsav Food Products VERSUS C.C.E.  & S.T.-Ahmedabad-iii

Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad

 

REGIONAL BENCH- COURT NO.3

Excise Appeal No.10612 of 2013

(Arising out of OIA-31-2013-AHD-III-SKS-COMMR-A-AHD dated 19/02/2013 passed by Commissioner of Central Excise, CUSTOMS (Adjudication)-AHMEDABAD-III)

 

Utsav Food Products

VERSUS

C.C.E. & S.T.-Ahmedabad-iii

 

APPEARANCE:

Shri Ishan Bhatt, Advocate for the Appellant

Shri G. Kirupanandan, Assistant Commissioner ( AR) for the Respondent

 

CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON’BLE MEMBER (TECHNICAL), MR. C.L. MAHAR

 

Final Order No. A/ 10937 /2023

 

 

 

 

C L MAHAR

DATE OF HEARING: 27.02.2023 DATE OF DECISION: 20.04.2023

 

 

The brief facts of the matter are that the appellants are engaged in the manufacture of biscuits falling under Chapter Sub-heading 19053100 of Central Excise Tariff Act, 1985 on job work basis for M/s. ITC Ltd. The biscuits manufactured by the appellant are marketed and sold by M/s. ITC Ltd. under brand name „Sunfeast‟.

2. The appellant are paid job work charges at a fixed rate per kg which covers the cost and reasonable margin/profit, to the appellant and as per the agreement between the appellant and ITC, the appellant are responsible for all statutory compliances including the compliance under the Central Excise Act, 1944 and rules made there under. The Biscuits falling under heading  19053100 are liable for assessment as per the provision of Section 4(A) of Central Excise Act, 1944 read with notification no.2/2006-CE (N.T.) dated 01.03.2006. The appellant have been paying duty on the biscuits manufactured by them up to February, 2007. The lower priced biscuits were

 

exempted from payment of duty from 01^st March, 2007 vide Entry at Sr.No.18A of Notification 03/2007-CE dated 01.03.2007. The appellants have been availing the benefit of notification no. 3/2007-CE dated 01.03.2007. The department was of the view that the appellant is to pay central excise duty on the intermediate excisable goods which emerges during the process of manufacture of biscuits as since their final product i.e. biscuits are exempted from Central Excise Duty.

3. It has been the contention of the department that the appellant have been manufacturing intermediate product namely “Sugar syrup” for captive consumption in their further manufacture of lower priced biscuits which are exempted from central excise duty by virtue of Notification No. 3/2007-CE dated03.2007. It has further been contended by the department that the benefit of notification no. 67/95-CE dated 16.03.1995 is not available to them as the notification is conditional stating that “nothing contained in this notification shall apply to inputs used in or in relation to the manufacture of the final products which are exempt from the whole of the duty of excise or additional duty of excise leviable threreon or are chargeable to NIL rate of duty” as their final product namely „lower priced biscuits‟ are exempted from payment of central excise duty, the appellant have been asked to pay duty on intermediate product namely “Sugar syrup”.
   • The department issued a show cause notice dated 14.12.2011 asking the appellant to pay central excise duty amounting to Rs. 35,87,669/-, interest and penal provision has also been invoked as per the provision of Central Excise Act, 1944. The matter got adjudicated vide Order-In-Original dated 02.03.2012 wherein, all the charges of the show cause notice were confirmed by the said order. The remedial appeal to the Commissioner (Appeals) of the appellant also did not succeed and therefore, they are before us against the above mentioned Order-In-Appeal dated 19.02.2013.It has been the contention of the appellant that the department has failed to prove that their intermediate product „Sugar Syrup‟ falls under the category of „goods‟ as envisaged in Section 3 of the Central Excise Act, 1944. It has been argued that as per the provision of Section 3 of the Central Excise Act, 1944, the exciseability of the particular product has to satisfy two condition

i.e. that the goods are manufactured or produced in India before excise duty is levied on them and same is mentioned in the Central Excise Tariff Act. The two conditions have to be cumulatively satisfied i.e. the process by which an item is obtained is process of manufacture and secondly, the item so

 

obtained is commercially marketable and bought and sold in the market or known to be sold in the market.

• It has further stressed that their intermediate product namely „Sugar syrup‟ does not satisfy the second condition of marketability of the product. It has also been mentioned that the issue is no longer res-integra as the issue at hand has already been settled by this tribunal in the case of M/s. DISHA FOODS PVT. LTD.- 2019 (370) ELT 1386 (Tri. Hyd.) and in following other cases
  • VENUGOPALFOODS PVT LTD- 2022 (2) TMI 665- CESTAT MUMBAI
  • M/S.BADAMI FOODS- 2019 (7) TMI 248-CESTAT HYDERABAD
  • RISHIBAKERS  LTD.- 2015 (328) ELT 634 (TRI.DEL.)
  • GANESHBAKERS  LTD.- 2017 (11) TMI 471-CESTAT NEW DELHI
  • LUCKYBISCUIT COMPANY- 2017 (7) TMI 235-CESTAT KOLKATA
  • BHAGWATIFOODS PVT – 2016 (9) TMI 678- CESTAT ALLAHABAD
  • PARLEBISCUITS  LTD.- 2018 (1) TMI 465-CESTAT NEW DELHI
  • BALAJIBAKERS  LTD.- 2018 (10) TMI 663-CESTAT ALLAHABAD
  • SURYAFOODS & AGRO – 2018 (6) TMI 564- CESTAT ALLAHABAD
  • B.BAKERS PVT. LTD.- 2016 (10) TMI 739-CESTAT NEW DELHI

 

4. We have heard both the sides and are of the view that the department has not come up with any evidence to prove that the „Sugar Solution‟ arising at the intermediate stage in the course of manufacturing of biscuits is marketable. In the absence of any such evidence and considering the fact that the condition in which „sugar solution‟ emerges has very short life and thus not marketable in the condition in which it emerges during process of

4.1  We also find that this issue has been settled by this tribunal in catena of decisions, abstract of some of such decisions are reproduced here below:-

The relevant portion of above cited decision in the case of M/s. DISHA FOODS PVT. LTD. (supra) is as follows:-

5. We have considered the arguments on both sides and perused the records. We do not find sufficient evidence to show that the sugar syrup manufactured by appellant is a marketable commodity. We also find that the fructose content of the sugar syrup has to be at least 50% by weight if it has to be an “excisable product” classifiable under Chapter Heading 1702 9090. In the case of Disha Foods Pvt. Ltd., the fructose content has not been tested or established to be 50%. In the case of Anand Food Products Pvt. Ltd., the fructose content was tested and found to be below 50%. Therefore, the sugar syrup cannot be classified under Chapter

 

heading 1702 90 90. The demand has to fail even on this ground. Thirdly, we find the Notification 67/95-C.E. exempts intermediate products even if the final product is exempt, if the appellant follows the procedure prescribed under Rule 6 of CCR, which the appellants have done in this case. In view of the above, we find the impugned orders are unsustainable and deserve to be set aside and we do so.

 

Similarly, in case of LUCKY BISCUITS COMPANY- 2017 (7) TMI 235-CESTAT

Kolkata held as under:-

 

5. We find that the issue in the present case is whether sugar syrup made by the appellant for captive use in the manufacture of exempted biscuit is chargeable to central excise duty under sub-heading 17029090. We find that both the lower authorities have concluded that the sugar content is more than 80% on empirical basis without any chemical test having been done. In the absence of chemical test to ascertain the precise fructose content of the goods, any conclusion that the goods are classifiable under sub-heading 17029090 is not sustainable. We also find that the CBEC Circular dated 7.11.1994 relied upon by the lower authorities has been issued in respect of sugar syrup produced in the manufacture of aerated water and ayurvedic medicines. Hence, the same cannot be applied to the sugar syrup being produced for the biscuits without establishing that the two products are identical. We also find that issue in this appeal is squarely covered by the judgment of the Tribunal in the case of Rishi Bakers Pvt. Ltd. (supra), wherein the Tribunal has held as under:

 

“8. Next comes the question of classification. The Department has classified the product, in question, under sub-heading 1702 90 90. Sub-heading 1702 90 90 comes under the 6 digit sub-heading 1702

90 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 1702 90 90 as “sugar syrup blends containing in dry stage, 50% by weight of fructose”. In our view for classification as sugar syrup blend in this sub-heading the product must contain 50% by weight of fructose sugar in dry state. In these cases, the appellant’s plea 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 1702 90 90, 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 1702 90 90, it cannot be presumed that they had accepted that the goods, in question, conform to the description of sugar syrup blends of sub-heading 1702 90 for which the sugar syrup in dry stage must contain 50% by weight of fructose. The Apex Court in the case of Metlex (I) Pvt. Ltd. v. CCE, New Delhi 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. v. 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 1702 90 90 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 1702 90 90, 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 question of marketability of the goods, in question. In this regard it is settled law that the marketability of a product has to be established in the condition in which it emerges. In this regard the Apex Court in the case of Bata India Ltd. v. 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  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 question, are marketable is absolutely wrong, as it has been presumed that the sugar syrup being made by the appellants is identical to the invert sugar syrup 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 + 66.50) and the same is a mixture of glucose (with specific rotation of +52.70) and fructose (with specific rotation of – 920), with net specific rotation of – 19.70. The process of hydrolysis of cane sugar (which is dextrorotatory i.e. with rotation of + 66.50) is also called inversion, as the mixture of glucose and fructose formed by this process is levorotatory with sp. Rotation of – 19.70 and for this reason the mixture of glucose and fructose formed by hydrolysis of cane sugar is called invert sugar. The invert sugar has longer shelf life. Whether a sugar syrup is ordinary cane sugar syrup or is invert sugar syrup has to be ascertained by chemical test which has not been done. It is, therefore, totally wrong to presume a given sugar syrup as invert sugar syrup without test. The judgments of the Apex Court in the cases of Gujarat Narmada Valley Fert. Co. Ltd. v. CCE & Cus. (supra), Nicholaas Piramal India Ltd. v. CCE, Mumbai (supra) and Medley Pharmaceuticals Ltd. v. CCE & Cus, Daman (supra) cited by the learned DR are not applicable to the facts of this case.

 

10. In view of the above discussion, we hold that neither there is any evidence to prove that the goods, in question, are classifiable under1702 90 90 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. The appeals are allowed with consequential relief.”

 

6. The above ratio of judgment is directly applicable to the facts of the present case. The above decision of the Tribunal has been followed in the case of Bhagwati Foods Pvt Ltd & Orthers Vs. CCE & ST, Kanpur in Final Order No.A/70409-70417/2016-EX[DB] dated 30.06.2016 in Appeal Nos. E/51610-51618/2015-EX[DB].

 

7. In view of the foregoing, we find that the order of Commissioner (Appeals) is not sustainable and the same is set aside. The appeal filed by the appellant is allowed.

 

5. Since, the facts of the matter at hand are similar to one which have been cited above, we follow the same and hold that the impugned Order-In- Appeal is not sustainable and accordingly, the appeal is allowed.

(Pronounced in the open court on 20.04.2023 )

 

(RAMESH NAIR) MEMBER (JUDICIAL)

 

(C.L. MAHAR) MEMBER (TECHNICAL)