Case Law Details
Patwari Bakers Pvt. Ltd Vs Commissioner of Central Excise (CESTAT Chennai)
In an important ruling, the CESTAT Chennai has held that the manufacture of non-marketable sugar syrup, used in the production of biscuits, is not liable to excise duty. This judgement has broad implications for manufacturers using intermediate products in the production process.
The Tribunal in the case of Patwari Bakers Pvt. Ltd vs. Commissioner of Central Excise clarified the taxation on intermediate goods. The appellant, a biscuit manufacturer, used an intermediate product, sugar syrup, during the production process. As the sugar syrup wasn’t being sold or marketed separately, the company did not pay any duty on it. The department argued that the syrup was marketable and hence, should be subject to duty.
However, the Tribunal concluded that without any concrete evidence of the sugar syrup’s marketability, the demand for excise duty could not be sustained. This ruling is in line with previous decisions, such as Rishi Bakers Pvt. Ltd. Vs. Commissioner of Central Excise and Service Tax, Kanpur, which upheld that a non-marketable intermediate product like sugar syrup is not liable to excise duty.
This ruling offers clarity for manufacturers on the interpretation of tax liability on intermediate goods that are not independently marketable. The judgement will potentially benefit businesses that use similar non-marketable intermediate products in their manufacturing processes, providing them with a sound basis to challenge unwarranted excise duty demands raised on them.
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