2017 (11) TMI 1510 - AT - Central Excise

Cancellation of registration - Since the respondents did not have a factory a notice was issued for cancellation of their registration as manufacturer - loan license basis - Held that - In view of the fact that the respondents are merely loan licensee they cannot be treated as a manufacturer. Since the respondents are not manufacturer they cannot be allowed to operate under the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 as manufacturer and no registration can be granted to them as manufacturer - cancellation upheld - appeal allowed - decided in favor of Revenue.

Summary

Issues:
Cancellation of registration of a pharmaceutical company under Customs Rules for manufacturing excisable goods.

Analysis:
The appeal was filed by the revenue against the order of the Commissioner (Appeals) setting aside the cancellation of registration of the pharmaceutical company. The issue revolved around the company's registration as manufacturers under the Customs Rules for availing benefits related to the import of goods at a concessional rate of duty for the manufacture of excisable goods. The company did not have its own factory but operated as a loan licensee with goods manufactured by another entity. The Dy. Commissioner canceled the company's registration as a manufacturer due to the absence of a factory. However, the Commissioner (Appeals) allowed the registration, citing precedents like the Tribunal's decision in Tamil Trading Corporation and Rallis India Ltd. The revenue argued that the apex court in the case of Cosme Farma Laboratories Ltd. had established that the job worker, not the loan licensee, was the manufacturer. The Tribunal noted the apex court's decision and concluded that the company, being a loan licensee without manufacturing capabilities, could not be considered a manufacturer eligible for registration under the Customs Rules.

The Tribunal referred to the apex court's decision in Cosme Farma Laboratories, emphasizing that the determination of a manufacturer is a question of fact. The apex court had ruled that the job workers, not the loan licensee, were the manufacturers in that case. The Tribunal highlighted that the decisions in the cases of Tamil Trading Corporation and Rallis India Ltd. were made without the benefit of the apex court's decision in Cosme Farma Laboratories, which clarified the role of a loan licensee as not constituting a manufacturer. Therefore, the Tribunal concluded that since the pharmaceutical company was merely a loan licensee without manufacturing capabilities, they could not be treated as a manufacturer eligible for registration under the Customs Rules. Consequently, the revenue's appeal was allowed, and the cancellation of the company's registration as a manufacturer was upheld.