2008 (6) TMI 387 - AT - Central Excise

Summary

Issues:
1. Admissibility of credit on Sulphamethoxazole as an anti-bacterial agent.
2. Use of Sulphamethoxazole in relation to the manufacture of final products.
3. Discrepancy in the use of Sulphamethoxazole for fumigation purposes.
4. Failure to counter Revenue's arguments by the respondent.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai involved a dispute regarding the admissibility of credit on Sulphamethoxazole, claimed to be used as an anti-bacterial agent in the manufacturing process. The Commissioner (Appeals) had initially upheld the admissibility of the credit based on the respondent's contention that Sulphamethoxazole was necessary for removing impurities from their raw material, Isaphghula husk, thus considering it as being used in the manufacture of final products.

However, the Revenue contended that Sulphamethoxazole was an anti-biotic drug, not an anti-bacterial agent, as confirmed by the Deputy Chief Chemist's report. The Revenue argued that an anti-biotic drug could only act when consumed by humans and could not kill bacteria present in the atmosphere. Additionally, the Revenue highlighted that Sulphamethoxazole was not utilized in the manufacture of the specific products claimed by the respondent, as per the statement of the General Manager of the manufacturing company. The Revenue further pointed out discrepancies, such as the destruction of Sulphamethoxazole in a fire incident that was not reported to the department, casting doubt on the necessity of the product for the manufacturing process.

The respondent failed to appear before the Tribunal or submit any written submissions to counter the Revenue's arguments. The Tribunal, after considering the lack of response from the respondent, set aside the order of the Commissioner (Appeals) and reinstated the Asst. Commissioner's order, thereby ruling in favor of the Revenue's contentions regarding the inadmissibility of credit on Sulphamethoxazole for the manufacturing process.