2006 (8) TMI 68 - AT - Central Excise

Manufacturer- Job worker - Once it is considered that appellant is a manufacturer, then duty has to be discharged by appellant on clearance of good to principal manufacture - not entitle for SSI exemption - Larger period of limitation invocable on him in other case

Issues Involved:
1. Whether the appellant is a job worker for M/s. Pfizer Ltd. or the manufacturer.
2. Ownership of the brand name 'Stelbid' and the admissibility of SSI exemption.
3. Demand of duty on 'Stelbid' tablets claimed to have been destroyed.
4. Demand of duty on goods clandestinely removed.
5. Demand of duty on additional consideration and turnover tax.
6. Non-reversal of Modvat Credit on inputs returned.

Issue-wise Detailed Analysis:

1. Whether the appellant is a job worker for M/s. Pfizer Ltd. or the manufacturer:
The Adjudicating Authority examined whether the appellant should be treated as a job worker for M/s. Pfizer Ltd. or as the manufacturer of the pharmaceutical products. The Commissioner concluded that the ratio of the Ujagar Prints case was not applicable to the appellant, relying instead on the Gujarat High Court decision in Indica Laboratories Pvt. Ltd. v. UOI. The appellants were discharging duty on the sale value of M/s. Pfizer Ltd. The Tribunal remanded the matter for reassessment based on the Ujagar Prints case. Upon review, it was determined that the appellant was indeed a job worker with its own manufacturing facility, not hired labor, and thus should be assessed based on the Ujagar Prints case. The demand and penalty under Section 11AC were set aside, and the matter was remanded for recalculating duty liability.

2. Ownership of the brand name 'Stelbid' and the admissibility of SSI exemption:
The Department argued that the brand name 'Stelbid' belonged to M/s. Smithkline Beecham Ltd. (SKB), making the appellant ineligible for SSI exemption. The appellant contended ownership based on various points, including application for registration and sales practices. However, the Commissioner, supported by documentary evidence, concluded that the brand name belonged to SKB. The Tribunal upheld this finding, noting that the appellant's declarations were misleading. The demand was upheld, but the penalty under Section 11AC was reduced to Rs. 1,25,000/-.

3. Demand of duty on 'Stelbid' tablets claimed to have been destroyed:
The Commissioner found that the appellant failed to produce credible evidence of destruction of 'Stelbid' tablets. The document provided appeared fabricated. The Tribunal confirmed the demand of Rs. 95,520/- but reduced the penalty under Section 11AC to Rs. 9,500/-.

4. Demand of duty on goods clandestinely removed:
The Commissioner confirmed a demand of Rs. 5,10,781/- based on evidence of clandestine removal to M/s. SKB and M/s. Shenoy Medicals. The Tribunal upheld this demand, supported by confirmations from the recipients of the goods. The penalty was reduced to Rs. 51,000/-.

5. Demand of duty on additional consideration and turnover tax:
The Commissioner confirmed a demand of Rs. 12,133/- for additional amounts collected from customers and Rs. 44,588/- for turnover tax. The Tribunal upheld the demand for additional consideration but dropped the demand for turnover tax, citing settled law. The penalty under Section 11AC was reduced to Rs. 1,200/-.

6. Non-reversal of Modvat Credit on inputs returned:
The Commissioner confirmed a demand of Rs. 1,45,913/- for non-reversal of Modvat Credit on returned inputs. The appellant's contention that the documents matched was rejected. The Tribunal upheld the demand based on documentary evidence but reduced the penalty to Rs. 14,500/-.

Additional Penalties and Interest:
Interest under Section 11AB on the duty confirmed was upheld. The penalty of Rs. 10,00,000/- under Rule 173Q was set aside. The penalty on the Managing Director under Rule 209A was modified to Rs. 50,000/-.

Summary of the Order:
1. Recalculation of duty liability based on Ujagar Prints case.
2. Upheld denial of SSI exemption for 'Stelbid' tablets; penalty reduced.
3. Confirmed demand for destroyed 'Stelbid' tablets; penalty reduced.
4. Confirmed demand for clandestine removal; penalty reduced.
5. Upheld demand for additional consideration; dropped turnover tax demand; penalty reduced.
6. Confirmed demand for non-reversal of Modvat Credit; penalty reduced.
7. Interest under Section 11AB upheld; penalty under Rule 173Q set aside.
8. Penalty on Managing Director modified to Rs. 50,000/-.

This comprehensive analysis ensures that all legal terminology and significant phrases from the original text are preserved, providing a detailed and thorough summary of the judgment.

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