Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

Comments

Print   |    |  Comment

PJ/CASE LAW/2014-15/2435

Whether excise duty leviable on sugar syrup used in medicament industry ?

Case:- C.C.E., C. & S. T., BANGALORE-I VERSUS SMITHKLINE BEECHAM PHARMA. (I) LTD.
 
Citation:- 2014 (308) E.L.T. 732 (Tri. - Bang.)
 
Brief facts:- The respondent is engaged in the activity of manufacture of crocin syrup which contains alcohol and the same is cleared without payment of duty. The respondent manufactures sugar solution (concentrated sugar syrup according to the Revenue) for consumption of the same in the manufacture of crocin syrup. Taking a view that respondent should have paid duty on the sugar syrup cleared for captive consumption, proceedings were initiated for demanding duty for the period from 1-9-1996 to 31-3-2001.
The Commissioner in the impugned order has dropped the demand. Aggrieved by this decision, Revenue is in appeal. The duty demand was proposed on the ground that crocin syrup is manufactured and cleared without payment of duty. Hence, the sugar syrup manufactured and consumed at an intermediate stage is leviable to central excise duty.
 
Appellant’s contention:- The learned AR submits that in this case, the sugar syrup produced has sugar concentration of about 29% and as per the Circular No. 226/60/96-CX., dated 3-7-1996 and Circular No. 780/13/2004-CX., dated 12-3-2004 issued by the Board, field formations have been instructed that if sugar syrup contains more than 65% by weight of the sugar or it contains any preservatives and is marketable, the same has to be charged to duty. He submits that in this case there was an admission by Shri C.R. Ravi, Assistant Manager (Quality Assurance) and Shri Syed Salim, Manager (Production) that methyl paraben and propyl paraben added to sugar syrup are preservatives. In view of the clear admission by both these Managers, apparently the product becomes chargeable to Central Excise Duty in accordance with the Board’s instructions. He further submits that the item has to be held as marketable since according to the admission of these Managers, the sugar syrup manufactured by them can be kept for a week.
 
Respondent’s contention:- The learned counsel for the respondent relied upon the decision of the Hon’ble Supreme Court in the case of Moti Laminates Pvt. Ltd.v. CCE [1995 (76)E.L.T.241 (S.C.)]to submit that just because the product can last for a week or 15 days, it does not become dutiable and evidence has to be shown that the product is marketable. He also submits that appellant manufactures sugar solution and not sugar syrup. Sugar syrup is manufactured in confectionery industry and sugar solution is manufactured in medicaments industry. He also submits that in view of the fact there is no evidence of marketability and the product cannot be considered as sugar syrup, the appeal filed by the Revenue cannot be sustained.
 
Reasoning of judgment:- The Hon’ble Tribunal have considered the submissions made by both sides. As rightly submitted by the learned counsel for the respondent, just because the product can be kept for a week, it cannot be said that the same is marketable. There is no evidence of marketability produced by the Revenue either before the Commissioner or in the appeal memorandum. Further, they also find that the decision of the Hon’ble Supreme Court in the case of Moti Laminates Pvt. Ltd. (supra) is applicable to the facts of this case as regards marketability. Paragraph 11 of the decision of the Hon’ble S.C. is relevant and is reproduced as under :
 
“11.It cannot thus be disputed that even if the resin produced by the appellants are resols as mentioned in item 15A it could not be subjected to duty. The purpose of specifying the goods in the Schedule is twofold, one, the rate on which the duty would be charged and other that if the goods satisfy the description and are covered in the Entry then they are liable to pay excise duty. But even in respect of specified goods it could be established that it was not marketable or capable of being marketed, therefore, no duty was leviable on it. The finding on this aspect has been extracted earlier. The Assistant Collector (Excise) found that unless some retarder or stabiliser was added the unstable solution was not marketable. Even assuming that such solution could last for 15 days as found by the Tribunal that would not help the Department unless it is further found that it was a produce which was marketable or capable of being marketed. The Collector had agreed with the finding of Assistant Collector that without any further process the solution was incapable of being used for any other purpose. It further cannot be disputed that even the life for 15 days depended on maintenance of particular temperature and heat. It cannot, therefore, be said that the goods were marketable or capable of being marketed. Since the test of marketability or capable of being marketable applies even to those goods which are mentioned in the tariff item the intermediate resin produced by the appellants which are mentioned as resols under Tariff Item No. 15A were not exigible to duty. The finding of the Tribunal that once the product manufactured by the appellants answered the chemical description of the product under Tariff Item 15A it was assessable to duty whether it was marketable or not was thus not well founded.”
Further they also find that Commissioner has considered this aspect in the impugned order. Paragraphs 18, 19 & 20 of the impugned order are relevant and are reproduced below :
“C.B.E. & C. has issued a clarification in its letter dated 3-7-1996 regarding the marketability of sugar syrup based on the opinion of the Chief Chemist. The above circular holds that sugar syrup has a shelf life and remains stable only when the concentration is 65% or above. When the concentration is less than 65% the shelf life can be improved only by adding preservative. Hence, to determine the marketability of sugar syrup we have to ascertain the following facts :
                                       
1.         Concentration of the sugar syrup
2.         Whether any preservative has been added.
 
19.In this case the chemical analysis of the sugar syrup reveals that concentration is only 29.15%. Even though the show cause notice alleges that the preservative have been added, the party contended that only the following items, which are not preservative, have been added to the sugar solutions emerging during the manufacturing process.
Liquid Glucose
Propyl Paraben
Methyl Paraben
Lactic Acid
 
20.There is no evidence to show that the above items are preservatives. In this case the sugar solution with specific parameters is produced for adding to crocin. The ultimate product is Crocin Syrup. In view of the requirements of the drug control, the sugar solution has to have strict norms. From the manufacturing process it is found that the sugar solution emerges in an integrated process in the manufacture of Crocin. Moreover to be marketable a product has to be in the proper container and packing. It is not the department’s case that the sugar solution emerging in this process can be marketed and used for any other purpose. Since the sugar solution has to have strict quality norms, I cannot hold that the same can be marketed for other purposes. In other words, the sugar solution, which emerges in this process, is not a very distinct and marketable commodity. Just for the reason that the shelf life of the solution is above 15 days in itself, it does not mean that the same is marketable. Hence the demand does not sustain.”
 
From the above, it is seen that the Commissioner has considered the marketability aspect and also use of preservatives. They find that the Commissioner’s order is in accordance with law and principles of classification and determination of liability of goods for excise duty. Hence it requires no interference. Accordingly, appeal filed by the Revenue is rejected as devoid of merits.
 
Decision:- Appeal rejected.
 
Comment:- The analogy of the case is that Sugar syrup of about 29% concentration that is used captively in manufacture of crocin syrup is not leviable to excise duty as there is no evidence to show that product is marketable. Merely because the product can be kept for a week, it cannot be concluded that the same is marketable. Further, the decision of the Hon’ble Supreme Court in the case of Moti Laminates Pvt. Ltd. was relied upon wherein it has been held that just because the product can last for a week or 15 days, it does not become dutiable and evidence has to be shown that the product is marketable. According to circular issued by CBEC, sugar syrup has a shelf life and remains stable only when the concentration is 65% or above. When the concentration is less than 65% the shelf life can be improved only by adding preservative. In the given case sugar syrup concentration is about 29%, which is unstable and cannot be held to be marketable. Hence, as the test of marketability is not satisfied, no duty is leviable on the sugar syrup.
 
Prepared by:- Monika Tak
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com