Customs, Excise and Gold Tribunal - Tamil Nadu
M/S. Sri Sarvaraya Sugars Ltd. vs Commissioner Of C.Ex. Guntur on 6 June, 2001
Equivalent citations: 2001(135)ELT1326(TRI-CHENNAI)
ORDER
Shri S.L. Peeran
1. Appellants are challenging the reconfirmation of demands on remand of this matter by the Tribunal with regard to Raw Sugar Syrup manufactured and captively consumed by them. Their contention is that this raw sugar is not classifiable under chapter sub-heading 1702.30 of CETA as it is not stable and does not have shelf life and not being marketable. The tribunal is the remand order while remanding the matter had observed that-
"We make it clear that citric acid is added as an ingredient in the sugar syrup before the preparation of the formulation for the beverages or has the concentration of sugar 65% and above, the appellants shall be liable to pay duty otherwise they will be covered by the instructions of the Board as set out above and would not be required to pay the duty. The appeal is, therefore, allowed by remand in the above terms."
2. Appellants contend that they had drawn samples and tested but they have not informed the department about the percentage of sugar syrup. They submit that in this regard, the Chief Chemist, Central Revenues vide his letter dated 24.2.97 has written to the AC, Central Excise Division Rajahmundry which is extracted below:-
"Sub: Central Excise - Retest of Raw Sugar Syrup - M/s. Sri Sarvaraya Sugar Ltd.- Reg.
Please refer to letter OC No. 256/96 dated 4.6.96 from Superintendent of Central Excise Range I, Rajahmundry on the above subject.
The sample of Sugar Syrup received under the cover of above mentioned letter from Superintendent was registered here vide Lab. No. CLR/9E-49/163 dated 19.8.96 and analysed with the following results.
The sample is in the form of colourless liquid. It is sugar syrup containing small amount of citric acid. The sample does not show any sign of deterioration.
"Syrup" (Sucross 667g, purified water sufficient to produce 1000g) finds mention as a monograph at page 1119 on O.P. 1995, one or more suitable antimicrubial preservatives may be added. It is also mentioned there in under "storage" that syrup should not be exposed to undue fluctuations in temperature. However, there is no mention of specific "shelf life" of syrup.
Citric acid is reported to be used as a preservative (antioxidant), in the technical literature.
Sealed remnant sample is being returned to you separately."
3. The contention of the appellants is that department has not established that the raw sugar syrup was goods and they have not proved anywhere that the Brix of sugar syrup produced by them was 65% or more or that any citric acid was mixed. They contend that the Dy. Chief Chemist's test report was totally vague and non-specific and cannot be relied upon. They further contend that M/s. Coca Coal began supplying the citric acid and laid down strict instructions in regard to preparation of these beverages i.e., before November '94 the appellants were adding 5 Kgs of citric acid in 325 kgs of sugar in which case the existence of citric acid would have been more prominent but not a mere trace. They contend that they maintain elaborate records and analysis of their own lab and according to their own laboratory report, the Brix of sugar solution in their case is only 620 B. Hence, they seek for setting aside the impugned order.
4. By Order-in-Original No. 75/95 dated 27.11.95, the Asst. Commissioner in para-6 has held as follows:-
6. I have none through all the material evidence placed before me and the arguments putforth at the time of personal hearing. I observe that
i) Rules are interpreted from time to time and the instructions from the Board are binding on the department.
ii) As quoted by the assessee, initial burden to prove that the product is known in market and is marketable is on the department. The revenue has discharged its responsibility by refering the raw sugar syrup sample for chemical examination.
iii) From the Chief Chemist's report, it is clear that the assessee's contention that the raw sugar syrup prepared by them does not contain citric acid is untenable and false.
iv) Since the sample is drawn on 19.9.95 and the test report is dt. 10.11.95, which states that the sample has not deteriorated for such a long period of fifty days proves beyond all douts that the raw sugar syrup has got shelf life.
v) In agreement with the assessee's contention on that the criteria for dutiability is marketability and for a product to be marketable, it should have shelf-life, the revenue has proved beyond doubt that the syrup has shelf-life thus marketable and hence dutiable.
Accordingly, I pass the following order.
ORDER The assessee's contention is not acceptable. The raw sugar syrup manufactured by them has citric acid in it. Is has shelf life. It is marketable. It is dutiable. Hence the declaration filed under Rule 173 B w.e.f. 1.5.95 stands rejected an hold that the sugar syrup is classifiable under Ch.1702.30 of Central Excise Tariff Act, 1985 and is dutiable at 10% adv. when used as an intermediate product in the manufacture of Maaza Mango. The assessee is dictated to file the declaration under Rule 173 B accordingly.
5. The findings of the Asst. Commissioner were confirmed by the Commissioner (Appeals) by holding in paras-4 to 6 as follows:-
4. I have examined the impugned order and the contention of the appellants carefully. While replying to the Show cause notice, the appellants contended that the fundamental requirement for the marketability is shelf life and that the sugar syrup manufactured by them has no shelf life in as much as, according to the present manufacturing process, Citric acid is not added at the stage of preparation of raw syrup. They also pleaded that the preparation of raw syrup is an on the line manufacture of aerated waters. There is no disputer that the sugar syrup was manufactured in an on the line process of manufacture of aerated waters/Maaza. The plea that it does not have shelf life in as much as citric acid was not added, was however found to be incorrect in view of the Deputy Chemist's report.
5. In view of the Dy. Chief Chemist's report indicating that the sample was sugar syrup containing citric acid, it is deemed to have shelf life which is an essential criteria for marketability as per the appellants. According to CBEC Circular No. 226/60/96 CX dt. 3.7.96 based on the advise of the Chief Chemist, Sugar syrup with concentration of 65% by weight or more will have shelf life even if citric acid (preservation) is not added. In terms of MFDR Circular No. 75/75/94 CX dt. 7.11.94 (1994 74 ELT Pg. T. 30) sugar syrup has been mentioned as excisable goods under 1702.30 in CETA and rate of duty has been prescribed for it. According to the above circular, since the product has shelf life it is marketable. Therefore, the decision of the Assistant Commissioner classifying the sugar syrup under 1702.30 in CETA and fixing the duty liability there under appears to be proper and correct.
6. Marketability means saleable or suitable for sale. It need to be marked. The article should be capable of being sold or being sold to consumers in the market as it is without anything more. Marketability also means capability of being marketed. Actual sale in the market is not necessary. Thus, the sugar syrup which is reported to be having a shelf life is capable of being sold in the market in case of appellants desires to sell it to those who are in need of it. Moreover, the circulars issued by the Board and the Government are not advisory in character but are binding on the Central-Excise Officers in terms of Honourable Supreme Court's decision in M/s. Micro Nutrients Vs. CCE (87) ELT PG19. The contention that non-supply of the test report was not raised before the Adjudicating authority at the time of replying to the Show cause notice or at the time of P.H. Therefore, this new ground raised at the stage of the appeal cannot be entertained. Accordingly.
ORDER I find no infirmity in the adjudication Order and the appeal is rejected.
6. Shri C. Sarabheswara Rao, Ld. Consultant attacked both the orders on the ground that the remand order has not been applied properly and the test laid down by the remand order has not been properly adhered to. It is his contention that the raw sugar syrup does not have shelf life although it is captively used and admits its shelf life of more than 4 hours but according to him it is not marketable. He contends that Board's circular had laid down 620 B for sugar brix for the purpose of liability of duty. As the same has not been found in the test report, the demand is not justified and requires to be set aside. He referred to Tribunal judgement in the case of HYDERABAD BOTTLING CO. LTD. Vs. CCE Hyderabad, 2000 (117) ELT-340 which also remanded the case to find out about (i) the quantum of concentration of sugar in the sugar syrup i.e. whether it is above 65% or below 65%; and (ii) if any, citric acid is added, then the stage at which it is added during the course of manufacture and in order to establish the above facts, chemical test of product as well as detailed study of process of manufacture was directed to be enquired, thereafter apply Board's circular No. 226/60/96-CX dated 3.7.96. In the case of Hyderabad Bottling Co. Ltd. (supra) sugar syrup was produced during the manufacture of 'Maaza' and it was held to be liable for duty under sub-heading 1702.30. It was noted therein that the 'citation of KAYPEE INDUSTRIES (supra) was distinguishable as the product admittedly had sucrose content over 90%.'
7. On the other hand Ld. DR submits that the issue is no longer res integra and the Tribunal has already held in the case of SUNRISE COLD STORAGE CO. Vs. CCE Pune, reported in 1999 (107) ELT 191 (T) that sugar syrup captively consumed for manufacture of fruit pulp to be marketable and dutiable under sub-heading 1702.30 of CETA and the findings recorded by the Tribunal in the above judgement is noted herein below:-
"Question involved in this matter is whether the Sugar Syrup manufactured by the appellant herein and captively consumed in manufacture of their final products 'Mango Pulp', 'Orange Pulp', 'Pineapple Pulp' is liable to pay duty or not. The period involved in the present case is 1-3-1986 to 28-2-1987 and the demand of duty is Rs. 5,571/- for the aforesaid period. The lower authorities have held that the appellants were required to pay duty on the aforesaid product 'Sugar Syrup' manufactured by them and utilised captively for their aforesaid products clearance of which was being made by them under small scale exemption notification 175/86-CE.
2. We have gone through the appeal memo. We have also heard leaned JDR. We observe that the sugar syrup is marketable product and is admitted by one of the partner of the firm Shri. P.B. Parekh, benefit of Notification 217/86-CE would not be available because their final product is exempted from payment of duty under the said notification. Therefore, sugar syrup manufactured by the appellant and used captively is liable to pay duty as held by the lower authorities under Tariff sub-heading 1702.30. Consequently, we do not find any substance in the appeal. Hence, we dismiss the same."
8. Ld. DR referred to a judgement of CADBURY INDIA LTD Vs CCE PUNE - 1988 (104) ELT 457 (T) wherein also sugar syrup obtained by dissolving sugar crystal in water separately was held to be classifiable under sub-heading 1702.30 of CETA. The findings clearly recorded that it was captively used and hence it is not marketable. The findings recorded in paras 4.1 to 5.1 is extracted below:-
"4.1 We have carefully considered the pleas advanced from both sides. We do not find much merit in the arguments of the learned Advocate for the appellants that the sugar syrup is not a manufactured product inas much it is the form of sugar into a solution form. Sugar syrup is separately classifiable under Tariff sub-heading 1702.30. Marketability, no doubt, may be the burden of the Revenue to prove but there is no contrary evidence submitted by the appellants that the product is unstable and therefore, it cannot be marketed Simply because they are not marketing, it cannot be inferred therefrom that the product is non-marketable. We, therefore, hold that sugar syrup is liable to duty.
4.2 However, on the plea of limitation we are of the view that the appellants have a strong case. The process of manufacture was well known to the department. This process was in existence even before introduction of the new Tariff and it cannot be claimed by the Revenue that it was not in their knowledge. The omission to mention in the classification list may, therefore, be treated as a bona fide belief of the appellants since they were not marketing the said product and as they were using it earlier which was fully exempted. This impression was further strengthened in the mind of the appellants inasmuch as there was a general declaration on the floor of the house that new Tariff does not bring out any new duty liability on the excisable products. We are of the view that the show cause notice dated 7/1/1991 for the period 1.3.1986 to 28.2.1987 is grossly barred by time. Hence, we set aside the demand of duty and consequently also set aside the penalty of Rs. 20,000/-"
5.1 The appeal is disposed of in the above terms.
9. Ld.DR also referred to the judgement of KAYPEE INDUSTRIES Vs CCE Bangalore reported in 1998 (102) ELT 226 wherein the Tribunal had upheld the classification of sugar syrup under the said sub-heading.
10. On careful consideration of the submission made by both sides, we notice that the Tribunal had already remanded the matter for de novo consideration and on such de novo consideration, both the authorities after drawing samples have upheld the allegation that the item is marketable and has got shelf life and is required to be classified under the said sub-heading and the findings have been already noted. The main plea of the appellant is that for the purpose of determining the item to be classifiable, the sugar content ought to have been determined and the department ought to have proved that the said item has got shelf life and is marketable. As the same has not been established, therefore the case has not been proved against them.
11. On careful consideration of this submission, we are unable to agree with Ld. Consultant for the reason that Tribunal has already expressed its view in all the judgements already extracted that the item has got shelf life and is marketable as it is captively used in the manufacture of food pulp. Appellants also manufactured the same product of 'Maaza' which is also held to be classifiable under 1702.30 by the Tribunal. Therefore the cited judgement applies to the facts of the present case. As a co-ordinate Bench, we are required to follow the judgement in terms of judicial discipline. There is no ground for referring the matter to Larger Bench. Therefore, while upholding the impugned order, we do not find any merit in the appeal and hence same is dismissed.
(pronounced in open court on 6.6.01)