1998 (10) TMI 250 - AT - Central Excise

Summary

Issues:
1. Waiver of deposit of duty and penalty.
2. Excisability of broth used in antibiotic production.

Analysis:
1. The case involved applications for the waiver of deposit of duty amounting to Rs. 4.58 crores and a penalty of Rs. 1 crore. The Collector had confirmed 51 show cause notices, leading to the filing of appeals. The Appellate Tribunal decided to take up all matters together due to space constraints, despite the possibility of filing individual appeals. The appellant was engaged in producing bulk drugs falling under Chapter 29 of the Central Excise Tariff Act.

2. The main issue revolved around the excisability of the broth used in antibiotic production. The appellant followed a specific procedure involving the use of fermentors, reactors, and various ingredients to generate antibiotics through fermentation. The question arose whether the broth, considered a culture medium by the department, was liable for excise duty. The appellant argued that the broth was not marketable due to its short shelf life and instability, thus not subject to duty. Expert affidavits were presented to support this claim, emphasizing that the broth should be classified as food media, not culture media. Legal precedents and technical references were cited to challenge the department's classification.

3. The Departmental Representative contended that the process described by the appellant was inaccurately labeled as food media instead of prepared culture media. Doubts were raised about the purity of externally procured media. Reference was made to previous tribunal observations and the absence of a declaration by the Board for Industrial and Financial Reconstruction (BIFR) under the relevant Act. The argument also addressed the differences in facts compared to a previous decision.

4. After considering the arguments, the Tribunal highlighted the complexity of determining the marketability of the product and refrained from reaching a prima facie conclusion. To safeguard revenue, the appellant was directed to pay Rs. 1.50 crores within two months, leading to a waiver of the remaining amounts and a stay on recovery. The decision aimed to balance the interests of the appellant and revenue protection.