2002 (10) TMI 175 - AT - Central Excise

Summary

Issues:
1. Classification of bulk drug under Central Excise Tariff
2. Admissibility of Modvat credit on inputs for manufacturing the bulk drug
3. Reversal of Modvat credit already availed by the appellant
4. Validity of show cause notice issued by Superintendent Central Excise

Classification of Bulk Drug under Central Excise Tariff:
The Tribunal analyzed the classification of the bulk drug Quiniotochlor under the Central Excise Tariff. The drug was considered a specified bulk drug under the Drugs Price Control Orders and covered by the Pharmacopoeia. The lower authorities classified it under sub-heading 3003.20, but the Tribunal disagreed, stating that it falls under the definition of medicament in Chapter 30 of the Tariff. The Tribunal found that the drug did not qualify as a medicament other than patent or proprietary, thus rejecting the classification under 3003.20 and the appellant's claim under 3003.10.

Admissibility of Modvat Credit on Inputs:
Regarding the admissibility of Modvat credit on inputs for manufacturing the bulk drug, the Tribunal considered the period from May 1995 to February 1998. It noted that during this time, the Assistant Commissioner did not have the authority to approve or amend declarations after an inquiry. The Tribunal referred to a Board Circular mandating completion of such inquiries within 30 days of declaration filing. It found that the proceedings initiated after 30 days, covering a period already under a Commissioner's notice, were impermissible as per the Circular, which is binding on the Revenue.

Reversal of Modvat Credit:
The Tribunal examined a show cause notice issued by the Superintendent Central Excise, questioning the classification of the bulk drug and the claim of duty credit on inputs. The notice alleged contravention of rules and denial of Modvat credit due to the drug's nil duty rate during a specific period. The Tribunal found that the notice did not invoke Rule 57-I for recovery within the prescribed time frame. As no allegations of fraud or wilful misstatement were proven, the demands for reversal of Modvat credit ordered by lower authorities were deemed invalid.

Validity of Show Cause Notice:
The Tribunal scrutinized the validity of the show cause notice issued by the Superintendent Central Excise. It highlighted that the notice did not comply with Rule 57-I for recovery within the specified time frame. As the notice lacked allegations of fraud or wilful misstatement, the demands for reversal of Modvat credit were deemed unsustainable. Consequently, the Tribunal set aside the orders of the lower authorities and allowed the appeal in favor of the appellant.