9911796707
TMI Blog2009 (10) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... pack is not in the list 1 of notification ibid - in view of the fact that once it is held that the process amounts to manufacture and the goods are not eligible for exemption under Notification No. 4/2006-C.E., dated 1-3-2006, appellant’s claim that goods can be exported under bond and when the goods are cleared to the UN Agency, exemption can be claimed under Notification No. 108/95, is to be upheld. Once this claim is upheld, appellants need not have to maintain separate accounts in respect of inputs used in the manufacture of these products since export under bond and clearances under Notification No. 108/95 are covered by the Rule which provides for exemption from maintenance of separate accounts. - E/822/2008 and E/409/2009 - A/307-308/2009-WZB/MUM/C-I/EB, - Dated:- 8-10-2009 - S/Shri B.S.V. Murthy, Member (T) and Ashok Jindal, Member (J) Shri Prakash Shah, Advocate, for the Appellant. Shri R.K. Vaiz, Jt. CDR, for the Respondent. [Order per: B.S.V. Murthy, Member (T)]. - Appellant is engaged in the manufacture of different bulk drugs and formulations falling under different sub headings of Chapter 29 and 30 of Central Excise Tariff Act, 1985. The appellant in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other antileprotic drugs 30049058 (ix) Other antimalarial drugs 30049059 The appellants have classified the disputed products manufactured by them as follows:- Sr. No. Products Chapter Sub-headings 1. M.B. Child, M.B. Adult, P.B. Child, P.B. Adult 30049058 2. Lamprene (Clofazimine) 30049058 3. Rimactane (Rifampicine) 30049057 4. Rimstar 4FDC 30049057 The Commissioner in his order has classified the above products as follows:- Sr. No. Products Chapter Sub-headings Rate of duty 1. M.B. Child, M.B. Adult, P.B. Child, P.B. Adult 30049055 Nil vide Notn. No. 4/06 dated 1-3-2006 2. Lamprene (Clofazimine) 30049055 3. Rimstar 4FDC 30049057 4. The appellants avail the credit of duty paid on Rifampicin (bulk drugs), Empty Hard Gelatin capsules and packing materials such as Blister/Aluminum foils, PVC films and printed cartons. They further avail credit of input services used in relation to the manufacture of the above products. 5. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id products are sold in a kit and not individually. Once they are put in a kit, the products would be commercially known as anti-tubercular drugs or anti-leprosy drugs. (iii) Once the said three formulations are put together in blister packing, new product with new name, character and use comes into existence. (iv) The classification adopted by the appellant is correct and proper in law. (v) It is an admitted position that only when these formulations are taken together, as prescribed, they will become anti-tubercular drugs or anti-leprosy drugs. (vi) Chapter sub-heading 30049057 and 30049058 specifically cover other anti-tubercular drugs or other anti-leprosy drugs. (vii) Individual classification of the formulation in the medicinal kit is wholly irrelevant for the purpose of classification of the kit. (viii) Chapter sub heading 30049057 and 30049058 are more specific of the purpose of classification of the medicinal kit. (ix) Essential character of the medicinal kit cannot be determined by predominance of either Dapsone or Clofazimine or by its alleged essential character. (x) It is settled law that the classification of the product has to be determined based on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less or negligible. In no case did M/s. Sandoz discharge any duty on the products during the import of these goods in bulk. In all the cases duty was paid through CENVAT Account only on export and it appears that this was done in order to encash the CENVAT credit balance lying in the account. 7.3. We find that Commissioner has come to the conclusion that the process of manufacturing the kits by the appellants does not amount to manufacture on the basis of following observations:- "19. In case of M.B. Adults, M.B. Child, P.B. Adults, P.B. Child, Rimactazid 2FDC, Rimstar 2FDC/4FDC, I find that capsules of Rimfampicin, Clofazamine and tablets of Dapsone are packed in Blister packs. Similarly, in case of Rimactazid 2FDC tablet of Rifampicin and Isoniazid, in case of Rimstar 4FDC, 4FDC, tablet containing Rifampicin, Isoniazid, Pyrazinamide and Ethambutol are packed together. 20. From Central Excise Tariff I find that Isoniazid, Rifampicin. Pyrazinamide, Ethambutol, Dapsone and Clofazamine are separately classifiable under CSH No. 30049051 to 30049055 as Antitubercular drugs or Antileptotic drugs. Other anti-tubercular drugs or other anti-leprotic drugs which are not covered of CSH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner (Appeals) logic is to be adopted, it would mean that every manufacturer of pharmaceutical products or cosmetic products has to pay duty twice on any one product first when it comes of the production line and the second when it is packed. This surely, is not the intention of the law makers." Against the said order of CEGAT an appeal was filed by the Central Excise department which was dismissed by the Supreme Court - 2004 (166) E.L.T. A116 (S.C.)." 7.4 As regards classification, as rightly discussed by the Commissioner above, the classification is to be done by following principles of Rule 3 of General Rules for the interpretation of Central Excise Tariff Act, 1985. However, the dispute can be resolved without going into classification aspect in this case. We find that even the Commissioner has not indicated specific heading in respect of each product. While different formulations, individually or separately classifiable under different headings as discussed by Commissioner, when it comes to combination going by Rule 3 of the interpretation Rules, each combination has to be classified under specific neading. The Commissioner has ruled-out classification under CSH 300490 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me consideration would apply to the note now under consideration by us. As we have noted it is identically worded (except for the tariff headings under consideration) as Note 4 to Chapter 33. Since each of the products was marketable on its own, putting them all together did not confer on them any attribute of marketability that it did not possess earlier. Each of the tablets continued to have a separate identity, which was not submerged in the new identity that the assembling of combination of tablets acquired. Such a combination did not in fact require any identity. It was, very simply, a matter of convenience for the customers. 6. It is also relevant to note that these four or three tablets were initially packed, after their manufacture into this combination packing. It is not as if they were first packed into separate packing and thereafter drawn from this packing and put into the packing presently under consideration. If the Commissioner (Appeals)'s logic is to be adopted, it would mean that every manufacturer of pharmaceutical products or cosmetic products has to pay duty twice on any one product first when it comes off the production line and the second when it is packed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to establish that goods were marketable even before the process was undertaken. 7.7 Another point which supports the case of the appellants is that the anti-tubercular or anti-leprosy drugs sold in the form of a kit are a distinct product with a new name, character and use. This is so because, admittedly individually Rimfampicin has applications in respect of other diseases also. When the different medicines are put in the form of a kit and categorized has been done by the appellants, it has an exclusive use and has a new name also. Nobody would go and ask for 28 tablets of one variety, 13 tablets of one variety and 2 tablets of another variety. One would ask for one kit as MB Adult, MB Child and PB Adult PB Child. These names are totally different from the names of constituents. Further, in Lupin Laboratories case, the Tribunal had taken note of the fact that tuberculosis patient derive greater benefit by combination of drugs used. Office memorandum of Ministry of Chemicals dated 4-7-1995 had explained that in order to maintain the continuity and regularity of intake of different drugs, the single pack containing the doses requirement of these drugs had been designed. Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons manufactured from bulk drugs specified in list: -1 of the Notification are exempted and each of the disputed formulation in this case is not manufactured out of bulk drugs specified in list -1 of the said notification. Each of the product contains Rifampicine which is admittedly not covered in the list -1 of the Notification and once all the formulations are not manufactured from bulk drugs specified in the list, disputed product did not get benefit of exemption. As submitted by the appellants, for the purpose of exemption and for the purpose of classification, the department is trying to treat each of the tables separately. Further, the appellants also made submission that similar products when cleared in the domestic market are being charged to duty. They have also specifically stated that similar product manufactured by Twilight Litaka Pharma Limited are being assessed to duty when cleared for home consumption. We find that this aspect has not at all been consiaered by the Commissioner in the impugned orders. Nevertheless, we agree that the contention.of the appellants that products in question are not eligible for exemption under Notification No. 04/2006-C.E., dated 1-3-200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
