2007 (4) TMI 439 - AT - Central Excise

Summary

Issues:
Demand of Central Excise duty on alleged clearance of finished goods and reversal of credit on alleged clearance of inputs.

Analysis:
1. The appeals raised a common issue of demand of Central Excise duty on finished goods and reversal of credit on inputs. The appellant, a pharmaceutical company, was accused of clearing goods without following proper procedures. The appeals covered three show cause notices for different periods with duty amounts, Cenvat credit, and penalties specified.

2. The appellant argued that they maintained a laboratory outside their factory premises for quality control as required by the Drug Control Act. They claimed to have necessary permissions and inspections from revenue officials, including no objections raised during audits. The defense highlighted the practice of testing samples and only clearing goods after satisfactory reports, with samples remaining in the laboratory until disposal.

3. The authorities concluded that the permission for the laboratory expired in 1988, leading to improper clearance procedures. The appellant contested this, stating no evidence of permission revocation or malpractice detection post-1988. They presented the registration certificate including the laboratory and argued that no objections were raised for subsequent periods, emphasizing the limitation period and citing relevant case law.

4. The Tribunal found the authorities' conclusion on permission expiration unfounded, lacking material evidence. The absence of malpractice detection post-1988 indicated the permission's continuity. The inclusion of the laboratory in the registration certificate further supported this. Consequently, the demand for duty, reversal of Cenvat credit, and penalties were deemed erroneous and set aside, allowing all three appeals.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Mumbai, showcases the legal intricacies involved in the case concerning Central Excise duty demands and clearance procedures for finished goods and inputs by the pharmaceutical company.