[Order per : Ashok Jindal, Member (J)]. - The appellants are in appeal against the impugned orders, wherein the adjudication order was set aside by the lower appellate authority.
2. The facts of the case are that the appellants are engaged in the manufacture of various pharmaceutical products viz., Ampicillion Sodium Injections. These injections were cleared by the appellants on payment of duty when they were sold under the brand name of “Conampi Injection” under Heading 3003.10 of the Central Excise Tariff Act, 1985. But when these injections were cleared bearing generic name, no duty was paid on them, but the appellants reversed 8% of the sale price on these clearances. During the course of manufacture of the above said injections, an intermediate stage comes into existence i.e. Ampicillion Sodium powder is manufactured by the appellants and which have been captively consumed to manufacture the final products viz., Ampicillion Sodium Injections.
3. Following show-cause notices were issued to propose the demand of duty on the Ampicillion Sodium used captively in the manufacture of exempted final products i.e. Ampicillion Sodium Injections cleared in generic name.
| Show cause notice No. & Date | Period of dispute | Demand (Rs.) | Proportionate reversal under Rule 57CC | Reversal @ 8% w.e.f. 23-7-1996 |
| 38/CEX/97 dated 12-7-1997 | Feb 95 to Aug 96 Dec 96 | 5,78,536/- | 6,41,381/- | |
| TR-V/Concept/ Pharma/Captive 97 dated 26-8-1997 | Feb 97 to May 97 | 3,64,759/- | - | - |
| TR-V/Concept/ Pharma/Captive 97 dated 27-11-1997 | June 97 to 13-10-97 | 5,06,419/- | | 6,32,053/- |
| Total | | 14,49,714/- | 6,14,381/- | 6,32,053/- |
4. The adjudicating authority dropped the show-cause notices giving the benefit of Notification No. 67/95 to the appellants. But on appeal by the Revenue before the lower appellate authority it was held that the appellants are not entitled to the benefit of Notification No. 67/95 and the demands were confirmed.
5. Aggrieved from the said orders, the appellants are in appeal before this Tribunal. The ld. Advocate for the appellants submitted during the course of arguments that the appellants are the manufacturer of medicaments and the same are falling under Central Excise Tariff Heading 30. He also submitted that it is also not in dispute that the item manufactured by the appellants does not fall under Heading 3003 of the Central Excise Tariff Act, 1985. He further submitted that as per Notification No. 10/96-C.E., dated 23-7-1996 specifically exempts the goods consumed in the manufacture of specified goods i.e. medicaments falling under Heading 3003 are the goods specified in the notification. Hence, the goods captively consumed in the manufacture of medicaments falling under Chapter 3003 of the First Schedule of the CETA, 1985 are exempt from whole of the duties of the Central Excise. Therefore, no demand is sustainable after 23-7-96. For the period prior to 23-7-1996, he submitted that the appellants have reversed an amount approximately of Rs. 6.00 lakhs, which is more than the demand proposed in the show-cause notice and no demand is sustainable prior to that also. He further sought the benefit of Notification No. 7/94-C.E., dated 1-3-1994 wherein it is stated that all goods falling under Chapter 29, manufactured in a factory and captively consumed in the manufacture of bulk drugs are exempts from whole of Central Excise duty, hence, prayed that the demands are not sustainable. He also submitted that the show cause notice No. 38/C.E./97, dated 12-7-1997 is barred by limitation as there is no suppression of facts by the appellants. On the other hand, the ld. DR submitted that the adjudicating authority has dropped the demand of show-cause notice on the basis that the appellants are entitled to take benefit of Notification No. 67/95-C.E., which is not entitled to the appellants as the same has been held by this Tribunal in the case of Aurobindo Pharma Ltd. v. C.C.E., Hyderabad, reported in (Tri.-Bang.) He further submitted that the reversal of 8% of the amount under Rule 57CC cannot be considered as duty on clearance of the goods captively consumed by the appellants. Hence, the demand confirmed by the impugned order is to be sustained.
6. Heard and considered.
7. On careful examination of the submissions made by both sides, we find that the arguments advanced by the ld. DR that the appellants are not entitled to take the benefit of the Notification No. 67/95-C.E. to the facts of the case, we do agree with the said arguments and the ld. Advocate for the appellants have also not contested this point during the course of his arguments. The Ld. Advocate submitted during the course of his arguments that the appellants are entitled for the benefit of Notification No. 10/96-C.E., dated 23-7-1996, which exempts of goods falling within the schedule of CETA, 1985 from whole of the duty of excise leviable thereon, which is specified in the said schedule, subject to the condition that the said goods are consumed within the factory of their production in the manufacture of goods specified in Column No. 3 of the table and at Serial No. 7 of the said notification in Column No. 3 the description of the goods is medicaments. It is not in dispute that the appellants are the manufacturer of medicaments. Hence, the appellants are entitled for the benefit of the said notification by giving the benefit of the said notification, no demand is sustainable for the period from 23rd July, 1996 onwards. With regard to the demands for the period prior to 23-7-1996, we also considered the submissions of the ld. Advocate that they are entitled for the benefit of Notification No. 7/94, dated 1-3-1994. But we are not in agreement with the submissions of the ld. Advocate as in the said notification, the appellant is entitled for the benefit only on the manufacture of bulk drugs. In this case as discussed herein above, the appellants are the manufacturers of Ampicillion Sodium Injections which cannot be termed as bulk drugs. Accordingly, the appellants are not entitled for the benefit of the said notification. Hence, the matter needs re-quantification of the demands for the period prior to 23-7-1996, keeping the issue open on limitation also. It is also clear that prior to 23-7-1996 the appellants have cleared their final products after reversal of 8% of the value of the exempted products cleared by them. During the course of re-quantification, this fact is to be considered by the adjudicating authority and the same shall be adjusted against the demand for that period. If any amount is payable by the appellants, the appellants shall pay the same within thirty days of the order of re-quantification of demand. As the issue involved in this case is of taking the benefit of certain notification, which requires interpretation, no penalty is warranted.
8. As discussed above, the matter is remanded back for the re-quantification of the duty payable for the period prior to 23-7-1996 to the original adjudicating authority after giving a reasonable opportunity to the appellants to present their defence for re-quantification and the same shall be adjusted against the amount reversed by the appellants for the period prior to 23-7-1996. With these observations, the appeal No. E/3001/2003 is allowed and the appeal No. E/3002/2003 is remanded.
(Pronounced in Court)