Custom, Excise & Service Tax Tribunal
Haldiram Krishi Udyog P Ltd vs Commissioner Central Goods And Service ... on 30 January, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 85146 of 2017
(Arising out of Order-in-Original No. 30/CE/NGP-II/2016/C dated 29.12.2016
passed by the Commissioner of Central Excise & Customs, Nagpur-II)
M/s Haldiram Krishi Udyog Pvt. Ltd. .... Appellant
Kh. No. 404, Village - Gumthala,
N.H. No. 6, Bhandara Road,
Nagpur - 440 001
Versus
Commissioner of Central Excise & Customs, .... Respondent
Nagpur - II Kendriya Utpad Shulka Bhavan, Telangkhedi Road, Civil Lines, Nagpur -= 440 001 APPEARANCE:
Ms. Padmavati Patil a/w Shri Viraj Reshamwal, Advocates for the Appellant Shri Rajiv Ranjan, Authorized Representative for the Respondent CORAM:
HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) HON'BLE MR. M.M. PARTHIBAN, MEMBER (TECHNICAL) FINAL ORDER NO. A/85264/2026 Date of Hearing: 30.01.2026 Date of Decision: 30.01.2026 PER: S.K. MOHANTY Briefly stated, the facts of the case are that the appellant is engaged, inter alia, in the manufacture of dairy based Sweetmeats (known as 'misthans' or 'mithai' etc.). The said products manufactured by the appellant are falling under Tariff Item No. 2106 9099 of the First Schedule to the Central Excise Tariff Act, 1985. However, such products are exempted from payment of Central Excise duty under the erstwhile Notification No. 3/2006-C.E. dated 01.03.2006 and the subsequent Notification No. 12/2012-C.E. dated 17.03.2012. The products manufactured by the appellant are being sold under the brand name of "Haldiram's". The officers in the Preventive Wing of the Department had visited the factory of the appellant on 03.01.2014 and from the 2 E/85146/2017 manufacturing process undertaken by them, it was observed that apart from manufacturing 'sweetmeats', the appellant is also engaged in the manufacture and clearance of excisable goods i.e. Sugar Syrup (chasni) falling under Chapter 2106 of the Central Excise Tariff Act, 1985, on which no Central Excise duty liability was discharged. On the basis of such observation, the Preventive Unit of the Department had recorded the statements from various persons and initiated show-cause proceedings against the appellant, seeking confirmation of the Central Excise duty liability in respect of the sugar syrup manufactured within the factory premises. The show-cause notice dated 09.08.2016 issued by the Department was adjudicated vide the Order-in-Original No. 30/CE/NGP- II/2016/C dated 29.12.2016 by the learned Commissioner of Central Excise and Customs, wherein Central Excise duty liability of Rs.3,59,65,216/- along with interest was confirmed and equal amount of penalty was imposed on the appellant; besides, it was also ordered for recovery of late fee of Rs.20,000/- under Rule 12(6) of the Central Excise Rules, 2002. Feeling aggrieved with the impugned order dated 29.12.2016, the appellant has preferred this appeal before the Tribunal.
2. Learned Advocate appearing for the appellant submitted that sugar syrup is used as a preservative to the sweetmeats manufactured by the appellant. She further submitted that since sugar syrup as such has not been sold by the appellant in the market, the said product seized to be excisable goods as per the definition provided under Section 2(d) of the Central Excise Act, 1944. Thus, she submitted that since the sugar syrup is not a manufactured product by the appellant and is not capable of being bought and sold independent of sweetmeats, the said sugar syrup cannot be subjected to levy of Central Excise duty. Learned Advocate also submitted that in the trade parlance, the product marketed by the appellant is known as "Rasgulla" and the sugar syrup added thereto as a preservative, has lost its identity for consideration as a distinct and separate product. Hence, she submitted that since the final products manufactured by the appellant are exempted from payment of Central Excise duty, separate duty liability cannot be fastened on the sugar syrup, when it was not sold as such, by the appellant in the open market. To support such stand, learned Advocate has relied upon the order passed by the Co-ordinate Bench of the Tribunal in the case of Rishi Bakers Pvt. Ltd. Vs. Commissioner of C.Ex. & S.T., Kanpur - 2015 (328) E.L.T. 634 (Tri.-
3E/85146/2017 Del.) and Commissioner of Central Excise, Jaipur-I Vs. Kanti Beverages Pvt. Ltd. - 2016 (344) E.L.T., 979 (Tri.-Del.).
3. On the other hand, learned Authorized Representative appearing for the Revenue reiterates the findings recorded in the impugned order. He further submitted that since sugar syrup has a shelf-life and is used as a preservative in the making of sweetmeats, the same should be considered as excisable goods for the purpose of payment of Central Excise duty thereon. He further submitted that since sugar syrup is a distinct product, capable of being bought and sold as such, in the market, the same should be considered as excisable goods and in absence of any specific exemption being provided for the said goods, it should be liable for payment of Central Excise duty.
4. Heard both sides and perused the case records.
5. Section 3 under the Act of 1944 is the charging section, which mandates for levy and collection of duty of excise on all excisable goods, which are produced or manufactured in India. On reading of the said statutory provision, it transpires that two essential conditions are required to be fulfilled, in order to determine whether any goods are liable for payment of Central Excise duty or not. The phrase 'excisable goods' has been defined under Section 2(d) of the Act of 1944, to mean 'any goods specified in the Schedule of the Tariff Act, as being subject to a duty of excise'. The explanation appended to the said definition has provided that "for the purpose of this clause, '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". On reading of the said explanation clause, it would transpire that 'marketability' is an essential element for consideration of a product as 'excisable' for the purpose of levy and payment of Central Excise duty. It is an admitted fact on record that the appellant is engaged in the manufacture of sweetmeats (mithai), which in the trade parlance is called as Rasgulla, Gulab jamun, Chamcham, Rasmalai etc.
6. It is no doubt, a fact that sugar syrup is used as a preservative for manufacturing of the said sweetmeat products; however, the products when sold in the market were commercially known as 'sweetmeats/mithai' and not as the sugar syrup. Since sugar syrup is not capable of being bought and sold by the appellant as a distinct and separate product, known 4 E/85146/2017 differently to the buyers of the said product, in our considered view, the said 'sugar syrup' is seized to be termed as excisable goods, for the purpose of levy and payment of Central Excise duty. The purpose of adding sugar syrup to the sweetmeats is with the objective that the said sweet products would not get dried up and thus would become non-saleable in the market in such condition. In view of the fact that sugar syrup, especially for the appellant, is not a tradable item, the same cannot be considered as a product emerging out of the manufacturing activity for consideration as excisable goods. We find that this particular dispute, should the sugar syrup be considered as an excisable product or otherwise, has been dealt with by the Co-ordinate Bench of the Tribunal in the case of Rishi Bakers (supra). The relevant paragraphs recorded in the said order are extracted herein below: -
"7. The dispute in the present case is as to whether sugar syrup made by the appellant for captive use in the manufacture of exempted biscuits is chargeable to Central Excise duty under sub-heading 1702 90 90 of the Central Excise Tariff. The Department's contention is that since the sugar syrup is used in the manufacture of the exempted biscuits, the benefit of Notification No. 67/95-C.E. would not be available. In this regard, the contention of the appellant is that in terms of the proviso to Notification No. 67/95-C.E., the full duty exemption to intermediate products being used for captive consumption is available 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-C.E., 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 under Rule 6 of the Cenvat Credit Rules. In this case, it is now known as to whether the appellant throughout during the period of dispute, were manufacturing only exempted final product or along with the exempted final product were also manufacturing dutiable final product. The proviso to notification is applicable only in a situation where by using common Cenvat credit availed inputs, a manufacturer manufactures dutiable as well as exempted final product>and in respect of the exempted final product, 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. v. 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. xxx xxx xxx
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 5 E/85146/2017 the similar goods in different condition being produced by another manufacturer, unless it shown that the two products are identical. 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 + 66.5°) 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 of glucose and fructose formed by this process is levorotatory with sp. Rotation of - 19.7° 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 under 1702 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."
7. In view of the foregoing discussions and analysis, we do not find any merits in the impugned order, insofar as it has held that that sugar syrup (chasni) should be considered as excisable goods. Therefore, the impugned order, confirming the adjudged demands on the appellant, is set aside and appeal is allowed in favour of the appellant.
(Dictated and pronounced in open court) (S.K. MOHANTY) MEMBER (JUDICIAL) (M.M. PARTHIBAN) MEMBER (TECHNICAL) Sinha