2015 (5) TMI 166 - AT - Central Excise

Under Valuation of goods - Liability of payment of duty - Who is the manufacturer - Held that - RGR is manufacturing goods on principle to principle basis. Moreover, they are manufacturing goods on behalf of the NPIL but they cannot be said as they are not manufacturer and NPIL is the real manufacturer in the light of decision of this Tribunal in the case of Glenmark Pharmaceuticals Limited reported in 2007 (11) TMI 192 - CESTAT, MUMBAI - manufacturer is RGR and NPIL is not the real manufacturer. RGR is discharging their duty liability on cost plus job work charges as per the formula prescribed by the Apex Court in the case of Ujagar Prints 1989 (1) TMI 124 - SUPREME COURT OF INDIA considering and also as per the CBEC Circular no. 619/10/2002 Central Excise dated 19/2/2002, duty demand against RGR on the selling price of NPIL is not sustainable. - Decided in favour of assessee.

Summary

Issues:
- Duty demand from the appellant RGR
- Penalty imposition on both the appellants

Analysis:
1. Duty Demand from Appellant RGR:
The case involved an appeal against the order demanding duty from RGR Pharmaceuticals ALS Derabassi and imposing penalties. The appellant, RGR, was a job worker of medicaments for Nicholas Pharmaceuticals (NPIL). An investigation revealed that RGR was manufacturing goods for NPIL, leading to duty demands based on under-valuation of goods. The appellants contested, arguing that RGR was the manufacturer/job worker, paying duty as per the formula in the Ujagar Prints case. The respondent contended that NPIL was the real manufacturer based on agreements and labeling. The Tribunal analyzed similar cases like Glenmark Pharmaceuticals and Dolphin Laboratories to determine the manufacturer. Ultimately, the Tribunal held that RGR was the manufacturer discharging duty correctly, as per the Ujagar Prints formula, and set aside the duty demand on NPIL's selling price.

2. Penalty Imposition on Both Appellants:
The Tribunal further addressed the issue of penalty imposition on both appellants. Considering that RGR had correctly paid duty as the manufacturer, the Tribunal deemed the penalty on both appellants as not imposable. Consequently, the impugned order was set aside, and the appeals were allowed with consequential relief if any. The decision was based on the findings that RGR fulfilled its duty liability appropriately, and therefore, penalties were not warranted.