2008 (6) TMI 135 - AT - Central Excise

Credit availed on inputs used in the manufacture of medicaments, which were cleared for export without payment of duty - medicaments cleared, were so cleared under a registered trademark and therefore it can hardly be gainsaid that the goods merited classification under SH 3003.10, which carried a rate of duty other than nil - Such goods cannot be treated as exempted merely for the fact that they were cleared without payment of duty credit cannot be denied

Summary

Issues:
Classification of medicaments for export under SH 3003.10, denial of MODVAT credit, trademark registration impact on classification.

Classification of Medicaments under SH 3003.10:
The appellants, manufacturers of medicaments, availed MODVAT credit on inputs used in manufacturing medicaments cleared for export without duty payment. The department contended the products were classifiable under SH 3003.20 with 'nil' duty rate, proposing penalty. The appellants argued the products were "P or P medicaments" under SH 3003.10, entitling them to input-duty credit. The lower authorities rejected this, confirming duty demand. The appellate tribunal noted the goods were medicaments under Heading 30.03, satisfying SH 3003.10 criteria, but were disapproved due to unregistered trademark. The pending trademark registration application was approved post lower authorities' decision, making the trademark deemed registered since 2-4-1996. Relying on previous orders, the tribunal held the goods were classifiable under SH 3003.10, not 'exempted goods,' allowing MODVAT credit.

Denial of MODVAT Credit:
The period of dispute post 2-4-1996 involved medicaments cleared for export under a registered trademark, warranting classification under SH 3003.10 with a duty rate. The goods, despite duty-free export, couldn't be deemed 'exempted goods' as they were under a registered trademark. Citing previous orders, the tribunal established that MODVAT credit on inputs for dutiable final products couldn't be denied to the appellants, supporting their entitlement to the credit.

Trademark Registration Impact on Classification:
The trademark registration, deemed effective from 2-4-1996, played a crucial role in determining the classification of medicaments for export. The tribunal emphasized that the goods, cleared under a registered trademark, couldn't be treated as 'exempted goods,' affirming their classification under SH 3003.10 and eligibility for MODVAT credit. The acknowledgment of the trademark registration by the tribunal influenced the decision to set aside the lower authorities' orders and allow the appeals with consequential reliefs.

This judgment clarifies the importance of trademark registration in classifying goods for export under specific headings, ensuring duty liability and entitlement to MODVAT credit. The tribunal's reliance on precedent and legal provisions highlights the significance of proper classification and registration in excise matters, safeguarding manufacturers' rights and benefits.