9911796707
TMI Blog1999 (5) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in paragraph 54 of the Handbook of Procedures issued by the Director General of Foreign Trade. The scheme contemplated that where export is made of the goods designated in the policy, the exporter would be entitled to credit of basic customs duty. The quantum of such duty would be determined on the basis of the deemed import content of the export product. The deemed export content itself was prescribed in the standard input/output norms which one prescribed by the licensing authority and contained in the Handbook. We are not concerned with the other provisions for the purpose of disposal of this appeal. To give effect to this policy, the Department of Revenue issued on 30-5-1995 a Notification 104/95. This notification, as it stood at the relevant time, exempted from basic and additional customs duty goods imported under a passbook issued by the licensing authority in which credit is given of an amount equal to basic customs duty payable of the inputs used in the product exported. The notification also contained inter alia a condition that the credit will be admissible only in respect of the items which are specified to the export of quantities indicated in the standard inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the term penicillin is now used generically for the entire group of natural and semi-synthetic penicillins. "They all have the same ring structure and are monobasic acids which readily form salts and esters; 6-aminopencillanic acid, the penicillin nucleus consists of a fused thiazolidine ring and a beta-lactum ring with an amino group at the 6 position." The entry on penicillins includes each of the bulk drugs exported by the appellant except cefadroxyl. This drug is separately dealt with in the Pharmacopoeia. There is however no dispute between the parties that this is not a drug derived from the penicillin. It also cannot be in dispute that the starting point for the drugs and formulations exported by the appellant is Penicillin G. Penicillin G is converted into 6 APA and by application of different technology and addition of other inputs required each of the final bulk drugs is obtained. It is possible also to make the final drugs without necessarily embarking upon manufacture from the stage of Penicillin G. It is thus possible to manufacture, by purchasing or otherwise acquiring 6-APA which has been manufactured to convert this into the finished drugs. These observations ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was Penicillin G and the norms applicable to that process have rightly been applied. 8. We must confess to a certain difficulty in understanding the norms prescribed in the policy. Considering the nature of the processes of manufacture of the final products, it cannot be disputed that none of the final products could be manufactured, so far as we are given to understand by both sides, without Penicillin G being the chemical at the starting point of manufacture, and without 6-APA or 7-ADCA emerging as inevitable intermediate product. It may be that this chain of manufacture could be broken and carried out in different places by different manufacturers. Thus one manufacturer may make 6-APA or 7-ADCA out of Penicillin G and another, elsewhere continued this process for the resultant antibacterial agents, which are exported. But taking anything other than a myopic view, it cannot be denied that every process of manufacture of goods has to begin with Penicillin G. The validity of a distinction between Penicillin G route and the other route (which must be a route other than Penicillin G route) therefore is very difficult to accept. There are other difficulties. The scheme is avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other would be entitled to the credit for 6-APA, since the starting point in the second factory would be in 6-APA. A second manufacturer who undertakes all the processes in one factory would not be so entitled. That the Customs officers themselves had great difficulty in reconciling themselves to such an approach is clear from the letter dated 15-9-1997 of the Commissioner of Customs to the Joint Director General of Foreign Trade. The Commissioner has expressed his difficulties to the licensing authority as to applying the route followed. He has pointed that most exporters have claimed that they followed the 6-APA route. He has also raised the difficulty in determining the starting in many cases and given the example that we have referred to of manufacture taking place in two stages in two factories. He has noted that the Commissioner of Customs at Mumbai has gone on the basis of the decal-rations given by the exporters and verified by the Central Excise authorities. He has clearly expressed the doubt that the question of applying different norms is difficult in cases where the inputs used are the same in one chain of manufacture at different stages. He has referred to the opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve was to manufacturer only amoxycillin, 6-APA coming into existence in a continuous stream of manufacture. We agree that this is only speculation; but in the absence of anything in the policy itself or clarification from the framers of the policy, the matter has to be decided after considering the various aspects in its best possible. 14. The departmental representative referred to the circular, dated 14-5-1996 of the director General of Foreign Trade. Paragraph 3 of the circular provides that if more than one input is allowed in the alternate for the manufacture of the resultant product, the credit under the passbook scheme the credit shall be allowed for the item having lowest duty incidence. The example shown in this paragraph is of bars/billets. We are of the view that it is only in cases where against the same export item more than one possible alternative input is shown that this provision will apply. Examples at serial 41 against this input is acetone/isopropyl alcohol. The same paragraph 3 of the circular in fact provides that against export of any resultant product more than one input has been allowed under the standard input/output norms credit can be claimed in on ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
