2014 (3) TMI 165 - AT - Central Excise

Duty demand - excess quantity in the injection - whether assessee required to pay duty on excess quantity or not - Held that - The appellant is filling the excess quantity in the injection as per the Drugs & Cosmetics rules, 1945. As the appellant is required to fill excess quantity as per the provisions in the Drugs & Cosmetics Rules, 1945, the appellant are not required to pay duty on this excess quantity. As duty is not payable, question of interest and penalty does not arise - as duty paid on account of control samples on inputs, inputs on machines trial are not contested, no order is passed on this aspect, but duty on excess quantity filled in the injection and interest and penalty confirmed in the appellant are waived - Decided in favour of assessee.

Summary

Issues:
- Duty demand confirmation along with interest and mandatory penalty
- Duty on control samples
- Duty on inputs used in machine trial
- Duty on excess quantity in the injection

Analysis:
1. Duty Demand Confirmation: The appellant appealed against an order confirming duty demand, interest, and penalty. The case involved the appellant, a manufacturer of medicaments, who did not pay duty on control samples and certain inputs used in machine trials. The appellant contested the duty demand on the remaining aspects of the order.

2. Duty on Control Samples: The Tribunal referred to the decision in Dabur India Ltd. where it was held that control samples retained in the factory are not liable to duty if proper accounts are maintained. Since the appellant maintained proper accounts for control samples, they were not required to pay duty on them. Consequently, interest and penalty for not paying duty on control samples were waived.

3. Duty on Inputs Used in Machine Trial: Citing the precedent in Kolsite Machine Fabrik Pvt. Ltd., the Tribunal ruled that goods used for testing final products to meet customer specifications qualify for MODVAT credit. As the appellant did not dispute the duty liability but duty was not payable on inputs used in the machine trial, interest and penalty were waived.

4. Duty on Excess Quantity in the Injection: The main issue was whether duty was required on the excess quantity filled in injections as per the Drugs & Cosmetics Rules, 1945. Referring to the case of Reckitt & Colman, it was established that duty was not payable on the excess quantity filled as mandated by the rules. Therefore, duty, interest, and penalty on the excess quantity were waived.

5. Conclusion: The Tribunal disposed of the appeals based on the findings. Duty on control samples and inputs used in machine trials was not contested, and no order was passed on these aspects. However, duty on the excess quantity in the injection, along with interest and penalty, was waived. The judgment clarified the duty liabilities of the appellant in each scenario, providing a comprehensive analysis of the legal principles and precedents applied.