2005 (7) TMI 395 - AT - Customs

Summary

Issues Involved:
1. Whether the transactions between the parties were of sale or job work.
2. Whether the recovery of Tartaric Acid from L-2 ABT amounted to manufacture.
3. Applicability of small scale exemption under Notification No. 175/86.
4. Applicability of the extended period of limitation under Section 11A of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Transactions of Sale or Job Work:
The core issue was whether the transactions between M/s. Yash Pharma and M/s. Themis Chemicals and Lupin Labs Limited were sales or job work. The department argued that the transactions should be considered sales due to the transfer of possession and valuable consideration. However, the respondents contended that the transactions were purely job work, with Yash Pharma recovering Tartaric Acid from L-2 ABT and returning it to Themis and Lupin, receiving only job work charges. The Tribunal found that there was no evidence of sale invoices or payments beyond job charges, leading to the conclusion that the transactions were job work and not sales. Consequently, no duty was leviable on such transactions.

2. Recovery of Tartaric Acid as Manufacture:
The Tribunal had to determine if the recovery of Tartaric Acid from L-2 ABT constituted manufacture. The Adjudicating Commissioner and the Tribunal had previously held that it did not amount to manufacture. The Apex Court directed the Tribunal to examine if there were sales or job work transactions. Since the Tribunal concluded that the transactions were job work, it aligned with the Apex Court's direction that no manufacture occurred if the recovery was on behalf of Themis and Lupin.

3. Small Scale Exemption under Notification No. 175/86:
The Tribunal evaluated whether Yash Pharma was entitled to small scale exemption for the sale of Tartaric Acid on its own account. The Adjudicating Commissioner had granted this exemption, and the Tribunal upheld it, referencing Circular No. 6/92 and the Supreme Court decision in Supreme Washers (P) Ltd. The Tribunal concluded that Yash Pharma's sales were eligible for the exemption, as the clearances of Yash Pharma Laboratories Private Limited were not clubbed with those of Yash Pharma.

4. Extended Period of Limitation:
The Tribunal considered the applicability of the extended period of limitation under Section 11A of the Central Excise Act, 1944. The department argued for its application due to alleged suppression of facts. However, the Tribunal found that the details of the transactions were known to the department, and clearances were made with departmental permission. Therefore, the extended period was not applicable.

Conclusion:
The Tribunal dismissed the appeals filed by the department, finding no merit in their arguments. The transactions between Yash Pharma and Themis/Lupin were job work, not sales, and thus not subject to duty. Yash Pharma was entitled to small scale exemption for its sales, and the extended period of limitation did not apply. The judgment was pronounced in court on 11-7-2005.