2016 (12) TMI 1052 - AT - Central Excise

Manufacture - Chargeability of excise duty - manufacture of Pepfiz Effervescent Tables ( Pepfiz ) using, among other things, absolute alcohol/ethanol. - Held that - the Hon ble Supreme Court had occasion to examine similar set of facts in Dabur India Ltd. vs. State of Uttar Pradesh 1990 (7) TMI 109 - SUPREME COURT OF INDIA and held that in order to attract duty under the 1955 Act all that is required is that a medicinal preparation should contain alcohol. Alcohol may be part of the preparation either because it is directly added to the solution or it came to be included in it because one of the components of that preparation contained alcohol. In the present case also, we note that appellant produced test report which indicated presence of alcohol in the impugned goods. Even otherwise, the usage of alcohol in the manufacturing activity of the impugned goods by itself is found to be sufficient - goods under Medicinal and Toilet preparations (Excise Duties) Act, 1955 (the M & TP Act) - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Dispute over excise duty liability on Pepfiz Effervescent Tablets under Medicinal and Toilet Preparations Act or Central Excise Act.
2. Applicability of excise duty on goods containing alcohol.
3. Interpretation of the term "containing alcohol" in medicinal preparations.

Analysis:
1. The appeal involved a dispute regarding the excise duty liability on Pepfiz Effervescent Tablets under the Medicinal and Toilet Preparations Act or the Central Excise Act. The appellants manufactured the tablets using absolute alcohol/ethanol, leading to a disagreement on the duty liability of the goods. The original authority demanded a significant amount as excise duty and imposed a penalty, which was confirmed by the Commissioner (Appeals) in the impugned order dated 16.2.2010. However, the penalty imposed on the appellant was set aside in the appeal process.

2. The central point of dispute revolved around whether the impugned goods contained alcohol, thus attracting central excise levy. The appellants procured and used alcohol in the manufacturing process, supported by a test report confirming the presence of alcohol in the tablets. The Commissioner (Appeals) had initially set aside the demand based on the test report but later confirmed the duty demand. The Tribunal emphasized that the physical presence of alcohol in the final product was not necessary to attract excise duty, as long as alcohol was used in the manufacturing process.

3. The Tribunal referred to the Supreme Court's decision in Dabur India Ltd. vs. State of Uttar Pradesh to interpret the term "containing alcohol" in medicinal preparations. The Court held that for duty under the 1955 Act, it is sufficient that a medicinal preparation should contain alcohol, whether added directly or included through one of the components. In alignment with this legal position, the Tribunal found that the test report confirming the presence of alcohol in the impugned goods, along with the usage of alcohol in the manufacturing process, justified setting aside the duty demand.

In conclusion, the Tribunal, following the legal precedents and the evidence presented, found no merit in the impugned order demanding excise duty on the Pepfiz Effervescent Tablets. The appeal was allowed, and the impugned order was set aside, emphasizing the interpretation of the term "containing alcohol" in medicinal preparations as per established legal principles.