2001 (10) TMI 136 - AT - Central Excise

Summary

Issues involved: Classification of pharmaceutical products for excise duty exemption under Notifications 75/94 and 30/88.

Summary:
The appellant, a manufacturer of pharmaceutical products including rifampicin, ethambutol, isoniazid, and pyrazinamide used in tuberculosis treatment, marketed two combinations of these drugs - AKT-4 and AKT-3. The issue arose when the authorities proposed denial of exemption under Notifications 75/94 and 30/88 on these combinations, demanding duty. The appellant claimed that rifampicin was partially exempted under Notification 30/88, while the others were exempted under Notification 75/94.

The Commissioner (Appeals) and Assistant Commissioner relied on Note 5 to Chapter 30, stating that packing separate medicaments together amounts to manufacture, making the new product liable to duty. However, the Tribunal disagreed, emphasizing that each tablet was marketable individually, and combining them did not confer any new marketability. The assembling of tablets was for customer convenience, not to create a new product.

Furthermore, it was highlighted that the tablets were initially packed into the combination packing, not repacked from individual packs. The Tribunal clarified that the intention of the law was to levy duty on value addition resulting from packing into retail packs, not to tax the same product twice. Processes like conversion into tablets and repacking facilitate sales to retail consumers but do not create a new product ineligible for exemption.

Ultimately, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief if permitted by law. The judgment focused on the lack of new marketability conferred by combining the tablets and the incorrect application of manufacturing principles by the lower authorities.