2005 (8) TMI 495 - AT - Central Excise

Summary

Issues:
1. Availment of Modvat credit and discharge of duties on medicaments/pharmaceuticals.
2. Disallowance of wrongly availed credit under Rule 57CC.
3. Interpretation of Rule 57CC regarding the use of raw materials for dutiable and exempted products.
4. Classification of products as branded and generic for duty purposes.

Analysis:

Issue 1: Availment of Modvat credit and discharge of duties on medicaments/pharmaceuticals
The respondents, as an assessee under the Central Excise Act, availed Modvat credit and discharged duties on medicaments/pharmaceuticals. Notices were issued to disallow wrongly availed credit during a specific period in contravention of Rule 57CC.

Issue 2: Disallowance of wrongly availed credit under Rule 57CC
The respondents availed credit of duty on inputs to produce Strepto Penicillin, used in manufacturing Fortified Procaine Penicillin and Benzyl Penicillin. The products were sold domestically under a Brand Name, exempt from duty, and were chargeable to duty when exported. The assessee did not maintain separate records for inputs used in the exempt product, and the discharge of 8% amount was allegedly not done. The Commissioner (Appeals) set aside the lower authority's order, leading to the appeal by the Revenue.

Issue 3: Interpretation of Rule 57CC regarding the use of raw materials for dutiable and exempted products
The Revenue argued that Rule 57CC applies when a manufacturer uses the same raw material in two different products, one dutiable and the other exempted. However, the assessee clarified that the same goods were either branded and exempted or generic and dutiable based on labeling. The Tribunal found that the Strepto Penicillin was used for both branded and generic products, dismissing the Revenue's argument against the application of Rule 57CC.

Issue 4: Classification of products as branded and generic for duty purposes
The Tribunal rejected the Revenue's claim that the products were not used for two different products, as the Strepto Penicillin was utilized in both branded and generic variants. Therefore, the grounds for removal of labels or denial of the 8% route under Rule 57CC were not upheld. The appeal was dismissed, affirming the utilization of Strepto Penicillin for both branded and generic Penicillin products, leading to the classification of the products for duty purposes.

In conclusion, the Tribunal upheld the assessee's utilization of Modvat credit and discharge of duties on medicaments/pharmaceuticals, rejecting the Revenue's arguments against the application of Rule 57CC and the classification of products for duty purposes.