Custom, Excise & Service Tax Tribunal
Shiv Shakti Processed Foods vs Commisioner Central Excise And Service ... on 25 October, 2023
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
EXCISE APPEAL NO: 85248 OF 2013
[Arising out of Order-in-Appeal No: P-I/MMD/224/2012 dated 23rd November
2012 passed by the Commissioner of Central Excise (Appeals), Pune - I.]
Shiv Shakti Processed Foods
Gut No. 54, Near Reliance Petrol Pump
Mumbai-Pune Road, Vadgaon Maval, Dist: Pune - 412106 ... Appellant
versus
Commissioner of Central Excise
Pune - I
ICE House, Sassoon Road, Pune - 411001 ...Respondent
APPEARANCE:
Shri Viraj Reshamwala and Shri Siddhanth Sriram, Advocates for the appellant Shri Xavier R Mascarenhas, Superintendent (AR) for the respondent CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) FINAL ORDER NO: A /87060/2023 DATE OF HEARING: 26/06/2023 DATE OF DECISION: 25/10/2023 PER: C J MATHEW This appeal of M/s Shiv Shakti Processed Foods challenges the confirmation of demand of ₹ 13,61,293/- under section 11A of Central E/85248/2013 2 Excise Act, 1944, along with applicable interest under section 11AB of Central Excise Act, 1944, and imposition of penalty of ₹ 10,00,000/- under rule 25 of CENVAT Credit Rules, 2002 which had been upheld in order1 of Commissioner of Central Excise (Appeals) now impugned in this appeal.
2. The issue, in brief, pertains to the excisability of 'sugar syrup' produced by them for use in manufacture of biscuits that were exempted from payment of duty, in terms of notification no. 3/2006- CE dated 1st March 2006 and, thereby, requiring duties of central excise to be discharged on intermediate products in accordance with notification no. 67/95-CE dated 1st March 1995.
3. The primary contention of the appellant is that 'sugar syrup' is not an intermediate product inasmuch as it fails the test of 'marketability' owing to being unstable compound made by heating of sugar, water and citric acid and, therefore, not liable to duties of central excise. It was contended by Learned Counsel for the appellant that the issue stands covered by the decision of the Tribunal in Venugopal Foods Pvt Ltd v. Commissioner of Central Excise, Pune -
II [2019-TIOL-110-CESTAT-HUM] and in Rishi Bakers Pvt Ltd v.
Commissioner of Central Excise & Service Tax, Kanpur [2015 (328) ELT 634 (Tri.-Del.)] 1 [order-in-appeal no. P-I/MMD/224/2012 dated 23rd November 2012] E/85248/2013 3
4. Learned Authorised Representative contends that the decision of the Hon'ble Supreme Court in Nicholas Piramal India Ltd v.
Commissioner of Central Excise, Mumbai [2010 (260) ELT 338 (SC)] has held that shelf-life, however, negligible, would suffice for excisability under Central Excise Act, 1944 and that the decision of the Tribunal in The Maharashtra Agro Industries Development Corporation Ltd v. Commissioner of Central Excise, Nagpur [2017- TIOL-257-CESTAT-MUM] has held that 'sugar syrup' is excisable.
5. We find from the records that the appellant supplies 'biscuits' to M/s Parle Products Pvt Ltd and that 'sugar syrup' generated within the factory of the appellant is an essential ingredient in manufacture.
The decision of the Hon'ble Supreme Court in re Nicholas Piramal India Ltd, while elaborating upon 'shelf-life', has held that 'marketability' is a question of fact. The decision of the Tribunal in re The Maharashtra Agro Industries Development Corporation Ltd relates to an entirely different product, viz. 'sugar concentrate', utilized in the manufacture of fruit juice. We find that the Tribunal, in disposing off appeal in re Venugopal Foods Pvt Ltd, has held that '3. It is contended on behalf of the appellant that the goods do not conform to the description in heading no. 17029090 of First Schedule to the Central Excise Tariff Act, 1985 and that, for want of shelf-life, the definition of 'excisable goods' in section 2 (d) of Central Excise Act, 1944, viz.
E/85248/2013 4 '"Goods" includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable.' as incorporated with effect from 10th May 2008, and relied upon in the show cause notice, could not be invoked. Learned Counsel for appellant drew our attention to the decisions of the Tribunal in Rishi Bakers Pvt Ltd v. Commissioner of Central Excise & Service Tax, Kanpur [2016 (328) ELT 634 (Tri-Del)] and in MB Bakers Pvt Ltd & others v. Commissioner of Central Excise, Indore [2017-TIOL-249-CESTAT-DEL] to contend that the former laid down the circumstances in which duty liability could arise for such products and that, relying upon this decision, an identically situated manufacturer had been granted relief from leviability to duty. Further contending that the first appellate authority had, erroneously and by placing reliance on circular no. 780/13/2004-CX dated 12th March 2004 of Central Board of Excise & Customs, disregarded their submission that the threshold of 'fructose' content specified in heading no. 170290 had not been fulfilled to warrant classification therein despite test report indicating the content.
4. Learned Authorised Representative cited the findings of the lower authorities that 'sugar syrup' is a marketable commodity and that the addition of 'citric acid' ensures adequate shelf-life to warrant the finding. Relying upon the decision of the Tribunal in The Maharashtra Agro Industries Development Corp Ltd v. Commissioner of Central Excise, Nagpur [2017-TIOL-257-CESTAT-MUM] which followed various other judgements of the Tribunal such as PepsiCo India Holdings Ltd v. Commissioner of Central Excise, Chennai [2009 (245) ELT 707 (Tri-Chennai)], upheld by the Hon'ble High Court of Madras, and Commissioner of Central Excise, Hyderabad v. Spectra Bottling Co Ltd [2006 (198) ELT 417 (Tri-Bang)] to arrive at the conclusion that concentration of sugar in the syrup of more than 65% and the presence of citric E/85248/2013 5 acid would render the goods marketable and, hence, liable to duty of central excise.
5. There can be no doubt that, unless otherwise established, the deemed marketability of 'sugar syrup' is beyond question. It is also admitted that the appellant had been discharging duty liability on 'sugar syrup' as 'intermediate goods' till July 2008 and had discontinued payment of duty on advice from their client, M/s Parle Products Pvt Ltd. For the sweetening of 'biscuits', the addition of 'sugar syrup' is a necessity and is, invariably, produced within the factory by dissolving 'table sugar' in water using heat. This process, known as hydrolysis, converts 'table sugar' into 'invert sugar' and transforms the 'sucrose' in the former into 'fructose' and 'glucose' of equal proportion. Though this hydrolysis can be achieved by application of heat, the addition of 'citric acid' speeds up the process of conversion. 'Invert sugar' has shelf-life, is marketable and is an excisable good. The contention of the appellant that 'sugar syrup' produced by them does not meet these requirements, owing to less than adequate 'fructose' content, is backed by a test report which is not controverted by the lower authorities.
6. The lower authorities have discounted the relevance of 'fructose' content by a semantic analysis of the description in heading no. 170290 of First Schedule to Central Excise Tariff Act, 1985 without any attempt to comprehend the role of 'sugar syrup' in the manufacture of biscuits and the process by, and purpose for, which 'sugar syrup' is produced. Consequently, the property of stability that is acquired by 'invert sugar' in contradistinction with 'sugar syrup' - which is a generic description of sugar dissolved in water - has not been taken into consideration while rendering the findings. The finding of 'sugar syrup' having shelf-life and, thereby, becoming excisable E/85248/2013 6 is not founded on a proper appreciation of the impugned product.
7. The relatively less stable 'sugar syrup' utilised in the manufacture of 'biscuits' has been recognised and acknowledged in the decisions of the Tribunal in re Rishi Bakers and in re MB Bakers Ltd. The decision in re The Maharashtra Agro Industries Development Corp Ltd does not stand on the same footing as the 'sugar syrup' used in the manufacture of 'juices and concentrates' are for purposes which are not comparable with the addition of adding 'sugar syrup' to 'biscuits' which is an entirely different food product.
8. In view of the decisions of the Tribunal dealing with an identical situation pertaining to another contract manufacturer of 'biscuits', and in the absence of any test report to contradict the 'fructose' content in the 'sugar syrup' produced by the appellant, we do not find sufficient reasons to consider the impugned goods to be excisable within the meaning of section 2(d) of Central Excise Act, 1944.'
6. In terms of the above decision of the Tribunal on 'sugar syrup' deployed in identical circumstances for identical purpose would apply in full. Accordingly, the impugned order cannot sustain and is set aside to allow the appeal.
(Order pronounced in the open court on 25/10/2023) (AJAY SHARMA) (C J MATHEW) Member (Judicial) Member (Technical) */as