2000 (11) TMI 401 - AT - Central Excise

Summary

Issues: Classification of duty payment on Paracetamol powder used in the manufacture of tablets under Rule 57CC.

In this judgment by the Appellate Tribunal CEGAT, New Delhi, the issue revolved around the classification of duty payment on Paracetamol powder used in the manufacture of tablets under Rule 57CC of the Central Excise Rules, 1944. The appellants manufactured Paracetamol, availing Modvat credit on inputs. The Paracetamol emerged in powder form, subject to duty at 18% ad valorem, while tablets made from the powder were cleared at a 'Nil' rate of duty. The appellants debited duty at 8% under Rule 57CC on tablet clearance, based on common inputs. However, the Asst. Commissioner directed duty payment at 18% on the powder used for tablets, rejecting Rule 57CC applicability. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

The Appellate Tribunal heard arguments from both parties. The crux of the appellants' argument was that by paying 8% duty on tablet clearance under Rule 57CC, no duty was required on the Paracetamol powder stage, citing duty exemption for captively consumed goods. However, the Tribunal disagreed, stating that paying 8% on exempted goods did not absolve duty on the powder under Rule 57CC. The Tribunal reasoned that duty at 8% on exempted goods does not equate to Excise Duty, as 'Nil' rate duty or exemption cannot coexist with 8% duty payment on the same final product. Therefore, the Asst. Commissioner's decision to subject the powder to 18% duty was upheld, as Rule 57CC did not apply in this scenario. Consequently, the appeal was dismissed, affirming the duty classification on Paracetamol powder used in tablet manufacturing.