2006 (6) TMI 304 - AT - Central Excise

Summary

Issues:
Excisability of "Production Media" used in the manufacture of bulk drugs such as Tetracycline and Streptomycin.

Analysis:
1. The main contention in the case was whether the "Production Media" used in the manufacture of Tetracycline and Streptomycin was excisable. The Revenue argued that duty was payable on the intermediate product, considering it as "Prepared Culture Media" falling under Chapter Heading 38.21. However, the appellant contested this, stating that the product in question was not marketable and did not fall under the specified heading.

2. The manufacturing process of Streptomycin and Tetracycline was detailed, emphasizing the use of specific cultures and ingredients in the production medium. The appellant argued that the composition and purpose of the "Production Media" differed significantly from the description provided in the Harmonized System of Nomenclature (HSN) Note for Chapter Heading 38.21, which primarily covers preparations for nourishing bacteria.

3. References were made to technical sources like the Kirk-Othmer Encyclopedia of Chemical Technology to highlight the distinction between "Production Media" and "Prepared Culture Media." The appellant demonstrated that the term "Production Media" was widely recognized in the antibiotics field and had a specific composition tailored for antibiotic production, unlike the general description of culture media.

4. The issue of marketability was crucial in determining the excisability of the product. The appellant presented evidence that the "Production Media" was not marketed or intended for sale in its current form, as it was used internally for manufacturing antibiotics in bulk. The lack of a certified shelf life further supported the argument that the product was not suitable for commercial distribution.

5. The Tribunal relied on established legal precedents to support the decision in favor of the appellant. Citing cases where marketability was a key factor in determining excisability, the Tribunal concluded that since the "Production Media" was not intended for sale or capable of being marketed, the duty demands and liabilities imposed by the Revenue were set aside.

6. Ultimately, the Tribunal ruled in favor of the appellant, stating that if the manufacture of the product itself was not established, the levy of duty could not be justified. The appeals were allowed, and the duty demands were set aside based on the lack of evidence supporting the excisability of the "Production Media" used in the manufacturing process of bulk drugs like Tetracycline and Streptomycin.