2015 (11) TMI 1246 - AT - Central Excise

Waiver of pre deposit - Whether the products, in question, Tinidazole Intravenous Infusion (Tinipidi), Metroidazole Sodium Chloride Injection, Metronidazole Injection with Dextrose, Ciprofloxacin Injection with Dextrose,Ciprofloxacin Injection with Sodium Chloride, and Mannitol Injection, all of which contain antibiotics in saline or glucose medium and other medicaments and are meant for Intravenous infusion are covered for duty exemption by the entry no.56 of the notification no.3/2001-CE dated 1.3.2001 which covered, Intravenous Fluids which are used for sugar, electrolyte and fluid replenishment Held that - Irrespective of the evidence of Dr. Vivek Sullere, w.e.f. 1.3.2001 the duty exemption would be restricted only to those Intravenous Fluids, which are used for sugar, electrolyte and fluid replenishment and the same would not be available to those Intravenous Fluids, which are meant for some other purposes. It is well settled law that the exemption notifications have to be construed strictly and this was one of the observations in the Apex Court s judgement dated 31.03.2009 while remanding the matter to the Tribunal. Thus, it cannot be said that the appellant have prima facie case in their favour. The undue hardship is determined on the basis as to whether the assessee has prima facie case in his favour and if so, to what extent. The Revenue s interest have to be safeguarded keeping in view the factors which are in favour of the Revenue. At this stage, ld. Counsel for the Appellant pleaded that the appellant in their stay application have also pleaded financial hardships as on account of their inability to re-pay the bank debts, their case was referred to Corporate Debt Reconstructing Cell of the Banks which have formulated re-habilitation package. He also pleaded that this factor may also be taken into account while considering the stay application. However, irrespective of the plea of financial hardships, since the issue involved in this case stands decided by the Tribunal against the Appellant in its judgement in case of Ives Drugs (India) Ltd. , Venus Remedies Ltd. & Ors. (2010 (10) TMI 649 - CESTAT, NEW DELHI) and this judgement has been upheld by Hon ble Punjab & Haryana High Courts, this is not a case for total unconditional waiver from the requirement of pre-deposit and the Appellant have to be put to certain conditions of pre-deposit to safeguard the interests of the Revenue. - Partial stay granted.

Summary

Issues Involved:
1. Eligibility for duty exemption under Notification No. 3/2001-CE dated 1.3.2001 for specific pharmaceutical products.
2. Consideration of expert opinions and adherence to procedural directions.
3. Prima facie assessment of the appellant's case and financial hardship for waiver of pre-deposit.

Issue-wise Detailed Analysis:

1. Eligibility for Duty Exemption:
The appellant, a manufacturer of various pharmaceutical products, contested the denial of duty exemption for products such as Tinidazole Intravenous Infusion, Metroidazole Sodium Chloride Injection, Metronidazole Injection with Dextrose, Ciprofloxacin Injection with Dextrose, Ciprofloxacin Injection with Sodium Chloride, and Mannitol Injection. These products were claimed to be eligible for duty exemption under Notification No. 3/2001-CE dated 1.3.2001 (Sl.No.56), which provided a nil rate of duty for "IV Fluids used for sugar, electrolyte, or fluid replenishment."

The central dispute was whether these products, which contain antibiotics and other medicaments, qualify as "IV Fluids used for sugar, electrolyte, or fluid replenishment." The Tribunal had previously ruled that such products were eligible for exemption only prior to 1.3.2001, when the exemption applied to any intravenous fluids, but not after the notification was amended to specify fluids used for sugar, electrolyte, or fluid replenishment.

2. Consideration of Expert Opinions and Procedural Directions:
The appellant argued that the Commissioner, in the de novo adjudication, ignored the Tribunal's directions to consider the affidavit of Dr. Vivek Sullere, which supported their claim for exemption. Instead, the Commissioner relied on an independent opinion from Govindgram Saksaria Institute of Technology and Science, Indore, without providing a copy to the appellant. The appellant claimed that this constituted a violation of procedural fairness and the Tribunal's remand order.

The Tribunal noted that the Supreme Court had remanded the matter to the Tribunal for a detailed examination of the impact of the 2001-2002 Budget on the definition of "IV Fluids" and the relevance of the Schedule-H Drug classification. The Tribunal emphasized that exemption notifications must be read strictly and the burden of proof lies on the assessee to demonstrate eligibility for exemption.

3. Prima Facie Assessment and Financial Hardship:
The Tribunal assessed the prima facie case of the appellant, noting that the issue had already been decided against the appellant in a previous judgment involving similar products. This judgment was upheld by the Punjab & Haryana High Court. The Tribunal reiterated that exemption notifications should be construed strictly, and the appellant's products, which contained antibiotics and other medicaments, did not qualify for the exemption post-1.3.2001.

Regarding the plea for waiver of pre-deposit due to financial hardship, the Tribunal acknowledged the appellant's financial difficulties but maintained that some conditions for pre-deposit were necessary to safeguard the interests of the Revenue. The Tribunal directed the appellant to deposit Rs. 1.20 Crores within 12 weeks, failing which the appeal would not proceed.

Conclusion:
The Tribunal concluded that the appellant did not have a prima facie case for total unconditional waiver of pre-deposit. The products in question did not qualify for the duty exemption post-1.3.2001 as they were not solely used for sugar, electrolyte, or fluid replenishment. The procedural fairness issue regarding the expert opinions was noted, but the Tribunal emphasized the strict interpretation of exemption notifications and upheld the requirement for a substantial pre-deposit.