2002 (1) TMI 135 - AT - Central Excise

Summary

Issues:
1. Permission for destruction of expired medicines and reversal of Modvat credit.
2. Confirmation of demand under Rule 9(2) of the Central Excise Rules, 1944.

Issue 1: Permission for destruction of expired medicines and reversal of Modvat credit:
The appellants, engaged in manufacturing pharmaceutical products, sought permission for the destruction of expired medicines. The Asst. Commissioner granted permission for remission of duty on the goods subject to the condition of reversing the Modvat credit taken for inputs used in manufacturing the goods. The CEGAT set aside the direction and remanded the matter to the Commissioner for a written order after considering the appellants' submissions and providing a reasonable opportunity for a hearing. The Commissioner, on remand, confirmed a demand of Rs. 2,89,600/- on the appellants under Rule 9(2) of the Central Excise Rules, 1944, citing contravention of Rule 49(1). The Commissioner observed that the party contested the reversal of Modvat credit, relying on Board's Circular and a previous CEGAT order. The Commissioner found the party eligible for remission of duty but required them to reverse the Modvat credit. The CEGAT held that since the Commissioner had already accepted the party's eligibility for remission of duty and Modvat credit, confirming the demand was unwarranted. Thus, the confirmation of demand was set aside, and the appeal was allowed.

Issue 2: Confirmation of demand under Rule 9(2) of the Central Excise Rules, 1944:
The Commissioner confirmed a demand of Rs. 2,89,600/- on the appellants under Rule 9(2) of the Central Excise Rules, 1944, read with Section 11A(1) of the Central Excise Act, 1944, for contravention of Rule 49(1). The Commissioner noted that the permission for destruction of expired medicines was subject to conditions, including the reversal of Modvat credit. The Commissioner found the party eligible for remission of duty but insisted on reversing the Modvat credit. However, the CEGAT held that since the Commissioner had already accepted the party's eligibility for both remission of duty and Modvat credit, confirming the demand was unjustified. The CEGAT set aside the confirmation of demand and allowed the appeal, emphasizing that the party should not be required to pay the duty on the final product in this case.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented, and the final decision rendered by the CEGAT in New Delhi.