2014 (5) TMI 294 - AT - Central Excise

Manufacture - Marketability - captive consumption - Demand of duty on captive consumption of Glyoxal used in the manufacture of Drug intermediates - Drug intermediates (2-Methyl Imidazol and 2-Methyl 5 Nitro Imidazol) exempted under Notification No.147/1984-CE, dt.19.06.1984 - Held that - it is specifically mentioned that though one of the raw materials for making drug intermediates is Glyoxal 40% but they are using Glyoxal 20%, which is an intermediate stream of their Glyoxal plant. No investigation has been done by the Revenue to argue that unstable Glyoxal 20% cannot be used in the manufacture of exempted drug intermediates manufactured by the appellant. It is also observed from the chemical test report dt.24.01.1991 from Chemical Examiner, Central Excise, Vadodara, that Glyoxal 20% on storage, deteriorates and cannot be considered as marketable. It cannot be said that drug intermediates are manufactured by the appellant only from the stable Glyoxal 40%. No case can be made against the assessee on presumptions and conjectures. The appellant was manufacturing exempted drug intermediates from unstable Glyoxal 20% which was not marketable and on which no duty was thus payable. - Decided in favor of assessee.

Summary

Issues involved:
Chargeability of Central Excise duty on captively consumed Glyoxal used in the manufacture of exempted drug intermediates under Notification No.147/1984-CE, interpretation of Notification No. 147/1984-CE, marketability and leviability of a product, duty on Glyoxal manufactured and captively consumed when used in the manufacture of exempted drug intermediates.

Analysis:
The appeal was filed against an order passed by the Commissioner of Central Excise & Customs, Vadodara, regarding the chargeability of Central Excise duty on captively consumed Glyoxal used in the manufacture of drug intermediates exempted under Notification No.147/1984-CE. The Revenue contended that the appellant used Glyoxal 40% in captive consumption, a stable product capable of being marketed, while the appellant argued they used Glyoxal 20%, which was not marketable. The appellant later informed the Drug Control Authorities about using Glyoxal 20% in the manufacturing of exempted drug intermediates. The issue revolved around the marketability and leviability of the product and the interpretation of the notification.

During the hearing, the appellant's advocate requested the case to be transferred to a Single Member Bench due to the nature of the issue and the amount involved. However, it was decided that the case could not be transferred as the issue was not about classification or valuation. The advocate's request for an adjournment was denied due to previous adjournments granted to them.

The Respondent defended the order passed by the adjudicating authority, emphasizing that the appellant manufactured Glyoxal 40%, a marketable product on which duty was correctly demanded when used in the manufacture of exempted drug intermediates.

After hearing the arguments and examining the case records, it was determined that the appellant was manufacturing exempted drug intermediates from unstable Glyoxal 20%, which was not marketable. The appellant provided evidence, including chemical test reports, to support their claim. It was concluded that no duty was payable on the unstable Glyoxal 20% used in the manufacturing process. Consequently, the appeal filed by the appellant was allowed with any consequential relief.

In conclusion, the judgment addressed the issue of duty on captively consumed Glyoxal used in the manufacture of exempted drug intermediates, focusing on the marketability of the product and the interpretation of relevant notifications. The decision was based on the evidence presented by the appellant, leading to the allowance of the appeal.