The Hindu Business Line : Sugar syrup to attract 16 pc excise duty

The sugar syrup used as an intermediate product in the manufacture of mithais, soft drinks, ayurvedic medicine, etc., will henceforth attract 16 per cent excise duty, irrespective of the level of sucrose concentration in it.

Soft drinks manufacturers such as Coke and Pepsi now buy sugar from mills for production of sugar syrup, which basically involves dissolving sugar in water at around 80 degrees Celsius with the addition of activated carbon (for removal of odours and colour) and citric acid (for preservation).

This purified sugar syrup is then blended with the soft drink concentrate and sold as the final product.

In the case of soft drinks, the final product already attracts excise duty of 24 per cent, which allows the companies to claim Modvat credit on the excise paid on the input and intermediates.

But in the case of branded mithai manufacturers, the product is chargeable to nil duty, which means that there cannot be any set-off in the event of paying the 16 per cent excise on sugar syrup.

According to a recent circular issued by the Central Board of Excise and Customs (CBEC), sugar syrup will attract excise duty if it satisfies the `test of marketability', which is the relevant criterion laid down by the Supreme Court.

"If the sugar syrup is marketable as such, without any reference to percentage of sugar concentration, then the same is excisable when taken for captive consumption or removed as such."

The latest circular modifies an earlier July 1996 circular, which linked excisability to the sugar concentration in the syrup.

The syrup was excisable if the sugar concentration was 65 per cent or more by weight, which conferred it with a shelf life even without addition of any preservative.

But now, the CBEC has held that the `test of marketability' and not the extent of sugar concentration will be the relevant criterion to determine excisability of sugar syrup.

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