2005 (10) TMI 480 - AT - Central Excise

Summary

Issues:
Classification of product as bulk drug or drug intermediate; Imposition of penalty when no intention to evade duty.

Classification of product as bulk drug or drug intermediate:
The appellant, a manufacturer of Bulk Drug used in medicament manufacture, argued that impurities in the bulk drug needed removal before use in medicaments. The Commissioner classified it as a drug intermediate, not qualifying for concessional duty under Notification No. 8/95. The appellant did not contest this classification but challenged the penalty imposition due to no intention to evade duty. The Tribunal held that while the drug was an intermediate, no penalty should be imposed in such a situation. The differential duty was confirmed, and the penalty was set aside, partially allowing the appeal.

Imposition of penalty when no intention to evade duty:
The appellant contended that since the concessional duty was not granted, they would have been entitled to Modvat credit on the duty paid on the bulk drug. Therefore, no penalty should have been imposed. The Tribunal agreed with this argument, setting aside the penalty but confirming the duty demanded in the impugned order. The penalty imposition was deemed inappropriate in the absence of an intention to evade duty, leading to the partial allowance of the appeal.