2018 (2) TMI 553 - AT - Central Excise

CENVAT credit - job-work - Held that - the job-worker M/s Navketan Pharma Pvt. Ltd. is the manufacturer who has already paid the excise duty. So, they are entitled to claim CENVAT credit. Reliance placed in the case of Commissioner of Central Excise, Goa Versus M/s. Cosme Farma Laboratories Ltd. 2015 (4) TMI 355 - SUPREME COURT , where it was held that Though the drugs/medicaments might not have been manufactured by the one who is a licensee and the actual manufacturer is guilty of manufacturing substandard drugs, the licensee becomes responsible and liable under the provisions in the said Act. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order-in-appeal denying CENVAT credit to job-worker and holding the appellant liable for excise duty.

Analysis:
The appellant, engaged in manufacturing drugs and cosmetics, provided raw materials to a job-worker who manufactured final products cleared on payment of excise duty. The department denied CENVAT credit to the job-worker and held the appellant liable for excise duty. The appeal was filed by both parties against this decision.

During the hearing, both parties presented their arguments. The Tribunal referred to a Supreme Court case where it was established that the job-worker, who carried out the manufacturing activity with their labor and machinery, should be considered the manufacturer. The Court clarified the distinction between the terms 'manufacturer' under the Drugs and Cosmetics Act and 'manufacture' under the Central Excise Act, emphasizing that adherence to quality control by the job-worker does not make the appellant the manufacturer.

Based on the Supreme Court's ruling, the Tribunal concluded that the job-worker was the actual manufacturer who had paid excise duty and was entitled to claim CENVAT credit. Consequently, the impugned order was set aside, and both appeals were allowed.