2003 (10) TMI 510 - AT - Central Excise

Summary

Issues involved:
1. Whether the process undertaken by the appellant on duty paid bulk drugs received back amounts to manufacture under Note 11 to Chapter 29 of the Schedule to the Central Excise Tariff Act.
2. Whether the process of reprinting the correct MRP on tablets received back constitutes manufacture under Note 5 to Chapter 30 of the Tariff.

Analysis:

1. Issue 1 - Bulk Drugs Reprocessing:
The appeal questioned whether the reprocessing of duty paid bulk drugs received back by the appellant constitutes manufacturing under Note 11 to Chapter 29. The appellant argued that the reprocessing involved physical processes like re-blending, milling, sifting, and washing, after which the reprocessed bulk drugs were returned to the units. They emphasized that they did not claim Modvat credit on the duty paid bulk drugs and followed the necessary procedures for returning defective drugs. The Commissioner had demanded excise duty based on the difference in batch numbers of the consignments, alleging manufacturing had occurred. The appellant contended that changes in batch numbers due to reprocessing, as mandated by the Drugs and Cosmetics Act, did not indicate new goods were manufactured. They cited precedents where similar processes were not considered manufacturing. The Tribunal concurred, referencing previous decisions and ruled in favor of the appellant, dismissing the duty demand.

2. Issue 2 - Tablet Repackaging:
Regarding the tablets received back for reprinting the correct MRP, the Revenue argued that the reprinting process amounted to manufacturing under Note 5 to Chapter 30. The appellant clarified that the process did not involve repacking from bulk packs to retail packs, thus Note 5 did not apply. The Tribunal agreed with the appellant, citing a previous case where changing labels on medicaments was not considered manufacturing under Note 5. Consequently, the Tribunal set aside the duty demand related to the tablet reprinting process.

In conclusion, the Tribunal upheld the duty liability for a specific quantity of Lovastatin but ruled in favor of the appellant for both the bulk drugs reprocessing and tablet reprinting processes, emphasizing that the processes did not amount to manufacturing as per the relevant provisions. The appeal was disposed of accordingly, providing clarity on the interpretation of manufacturing processes under the Central Excise Tariff Act.