2006 (9) TMI 401 - AT - Central Excise

Summary

Issues:
1. Whether the process of de-foiling and re-foiling medicaments amounts to manufacture under Note 5 to Chapter 30.
2. Whether the demand for disallowing Modvat credit is barred by limitation under Rule 57-I and Section 11A.

Issue 1:
The appellants, as manufacturers of medicaments, brought back tablets for de-foiling and re-foiling due to price reduction, aiming to show a reduced Maximum Retail Price (MRP). They claimed Modvat credit on duty paid tablets, de-foiled them, and re-foiled at a lower MRP, considering this process as manufacturing under Note 5 to Chapter 30. The Tribunal agreed that altering MRP by de-foiling and re-foiling falls under manufacturing, citing Macleods Pharmaceuticals Ltd v. CCE. The process aligns with Rule 104A, allowing MRP changes by manufacturers. The Tribunal upheld that the process amounts to manufacture under Chapter 30.

Issue 2:
The lower authorities disallowed credits taken by the appellants, invoking Rule 57-I and Section 11A for time-barred demands. However, the appellants had filed declarations specifying Ciplox tablets as input and final product, indicating Modvat credit availed. The invoices from the de-foiling center supported the re-foiling process, showing tablets re-packed in bulk. The Tribunal found the demand barred by limitation, supported by previous orders. There was no suppression of facts to invoke Section 11A or Rule 57-I. The appeals were allowed, setting aside the lower authority's decision on credit disallowance and penalties.

In conclusion, the Appellate Tribunal CESTAT, Mumbai ruled in favor of the appellants, holding that the process of de-foiling and re-foiling medicaments amounts to manufacturing under Note 5 to Chapter 30. The demand for disallowing Modvat credit was deemed time-barred under Rule 57-I and Section 11A, as the appellants had correctly declared inputs and final products, with invoices supporting the re-foiling process. The Tribunal found no grounds to uphold the lower authority's decision, setting it aside and allowing the appeals.