1999 (9) TMI 457 - AT - Central Excise

Summary

Issues:
Manufacture of medicaments on loan license basis - Inclusion of clearances in annual clearances for SSI exemption calculation.

Analysis:
The appeal was against an Order-in-Original requiring duty payment of Rs. 53,354 for medicaments manufactured on loan license basis by the appellants at another factory. The key issue was whether the clearances of such medicaments should be included in the appellants' annual clearances for determining SSI exemption eligibility.

The appellants supplied raw materials to another factory, M/s. Jenerik Products, for manufacturing medicaments under a loan license. The manufacturing process was done at M/s. Jenerik Products' premises without the appellants' supervision or control. The goods were then cleared to the appellants' depots for sale. The dispute arose from a duty demand for the financial year 1988-89, which was partially confirmed in the impugned order.

The consultant for the appellants argued that a previous Tribunal decision established that clearances from another factory should not be clubbed with the loan licensee's clearances if no supervision or control was exercised. He also highlighted a clarification from the Collectorate supporting this position. The appellants' case was deemed similar to the precedent case, making the impugned order erroneous.

The Tribunal referenced the previous decision involving S.O.L. Pharmaceuticals Ltd., which concluded that clearances from a manufacturer under a loan license should not be added to the loan licensee's clearances without supervision or control. Since the appellants did not supervise M/s. Jenerik Products, the same principle applied. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary relief according to the law.

In conclusion, the Tribunal ruled in favor of the appellants, determining that the clearances of medicaments manufactured by M/s. Jenerik Products under a loan license should not be included in the appellants' annual clearances for SSI exemption calculation due to the lack of supervision or control by the appellants over the manufacturing process at the other factory.