2007 (11) TMI 192 - AT - Central Excise

Appellant get medicines manufactured on job work basis - Merely giving mfg. instructions, mfg. programme & specifications of medicines -no evidence has been brought out on record to show that the premises of the job workers were so hired nor there is any evidence to show that the goods were manufactured under the complete control & supervision of raw material supplier he is not manufacturer so duty has been rightly paid on the basis of cost of production plus mfg. expenses including profit

Summary

Issues:
1. Determination of the manufacturer of goods manufactured on job work basis.
2. Liability of duty payment based on the selling price or cost of production plus expenses.
3. Control and supervision over the manufacturing process.
4. Interpretation of agreements between raw material supplier and job worker.
5. Application of previous legal precedents in similar cases.

Analysis:
1. The key issue in this case was to determine the manufacturer of goods manufactured on job work basis. The Tribunal examined whether the raw material supplier, in this case, M/s. Glenmark Pharmaceuticals, could be considered the manufacturer, as alleged by the Commissioner, or if the job worker, M/s. Niramay Pharma, should be considered the manufacturer.

2. The Tribunal analyzed the liability of duty payment, considering whether it should be based on the selling price of the goods or on the cost of production plus manufacturing expenses, including profit. The Tribunal referred to the Supreme Court decision in Ujagar Print's case and various other legal precedents to determine the appropriate basis for duty payment.

3. Another crucial aspect examined by the Tribunal was the control and supervision over the manufacturing process. The Tribunal considered whether M/s. Glenmark Pharmaceuticals had sufficient control and supervision over M/s. Niramay Pharma's manufacturing process to be classified as the manufacturer. The absence of evidence showing complete control and supervision by M/s. Glenmark Pharmaceuticals led the Tribunal to rule in favor of M/s. Glenmark Pharmaceuticals not being the manufacturer.

4. The Tribunal also delved into the interpretation of agreements between the raw material supplier and the job worker. It scrutinized the terms of the agreement to ascertain the level of control and supervision exercised by M/s. Glenmark Pharmaceuticals over the production process at M/s. Niramay Pharma's premises.

5. Lastly, the Tribunal applied previous legal precedents, including decisions by the Gujarat High Court and other Tribunals, to support its ruling. By aligning with the decisions in cases such as Indica Laboratories, Lupin Laboratories, Dolphin Laboratories, Remidex Pharma, and Cosme Remedies, the Tribunal concluded that M/s. Glenmark Pharmaceuticals could not be considered the manufacturer in this scenario.

In conclusion, the Tribunal set aside the Commissioner's order and allowed the appeals, emphasizing the importance of evidence demonstrating control and supervision in determining the manufacturer of goods manufactured on job work basis.