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TMI Blog2003 (5) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... ober 94. After the Ciplox tablets were de-foiled/re-foiled, Cipla cleared the de-foiled/re-foiled tablets oh payment of duty by utilizing part of the said Modvat credit i.e. Rs. 63,13,338/- on the ground that the process of de-foiling/re-foiling the duty paid Ciplox T amounted to manufacture in terms of Chapter Note 5 to Chapter 30 of CETA 85. 2. The value adopted for these clearances was based on the maximum retail price (reduction in price minus stockists margin) being the sole reason why they brought back the subject goods from the depot etc. for printing the revised maximum retail price (on the lower side) so as to comply with the provision of Standards of Weights Measures Act, 1976, (Packaged) Commodities Rules, 1977. 3. The balance credit of Rs. 30,10,898/- (98,24,286-63,13,338 (sic) (68,13,388)=30,10,898) was utilised by them for payment of duty on other clearances from the factory. 4. The demand notice dated 30-10-1996/13-11-1996 was issued to the applicant by the jurisdictional Commissioner, Central Excise, Mumbai-I inter alia proposing to recover the Modvat credit of Rs. 98,24,286/- availed and utilized by the applicant and also the Central Excise duty of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of higher MRP pointed on that stock could not have been sold. Accordingly, the applicants decided to bring the duty paid CIPLOX T from its depot/warehouse/stockists to the factory for the purpose of defoiling the blister and putting the defoiled tablets into the fresh blister packing showing the revised/reduced MRP. This was the only way by which the applicant could ensure that even the stock of CIPLOX T lying in balance at the depot/warehouse/ stockist could be sold at a reduced MRP to the consumers. The Standards of Weights Measures Act (Packaged) Commodities Rules, 1976 does not permit any person to alter, obliterate or deface any inscription mark affixed by the manufacturers on the containers, label or wrapper of any drug. 13. The applicant sought legal opinion from their consultants as to whether the process of defoiling and or refoiling the CIPLOX T brought back from the warehouse would amount to manufacture in terms of Section 2(f) of the Central Excise Act read with Note 5 to Chapter 30 of the Central Excise Tariff Act, 1985 and if the process would amount to manufacture, whether Modvat credit of the duty paid on CIPLOX T brought back from warehouse can be taken. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire gain for the applicants was Rs. 30,10,898/-. The balance amount of Rs. 68,13,388/- had already been reversed when the so-called duty was paid on CIPLOX T defoiled and/or refoiled and cleared to Patalganga unit and warehouse. (b) In the entire process of taking credit on CIPLOX T brought back, the amount gained by the applicant by wrongly taking Modvat credit was only Rs. 30,10,898/-. Had the applicants filed refund claim under Rule 173L, they would not have got this amount and would have got only the lesser amount of Rs. 68,13,388/- which was paid as duty subsequently. Therefore, the actual duty involvement in the present case is only Rs. 30,10,898/-. This amount has already been paid by Cipla. (c) The case of the Revenue is that the CIPLOX T returned from the warehouse was not subjected to the process of manufacture. The defoiled/refoiled CIPLOX T which were subsequently cleared were the same CIPLOX T which were brought back by the applicant. In such a situation, the CIPLOX T cleared by the applicants after defoiling should be treated as input removed as such. (d) In such a situation, the amount of Rs. 98,24,286/- ought to have been paid on the CIPLOX ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A Part II account or by recovery of the sum separately if the same is not available in the account, having already been utilized for payment of duty. In the present case, since the amount of credit was in fact utilized for payment of duty of goods which are admitted by the Department to be eligible for exemption and hence not liable for duty, utilization of such credit for payment of duty thereon would serve the purpose of disallowance of credit as required under Rule 57C. There would be a case for confirming the demand by bringing into play Rule 57C if credit had been taken but kept intact due to the inputs being used for the manufacture of the exempted goods which were cleared without payment of duty availing of such exemption and such credit was being utilized for other goods not relatable inputs in question. That would be the only way Rule 57C will come into reckoning. Such a situation dos not present itself in the present case as the credit was not left unutilized vis-a-vis the final product made from the inputs in question. (g) The CEGAT in the case of CCE v. Piramal Spinning and Weaving Mills reported at 2002 (145) E.L.T. 322 (T) = 2002 (49) RLT 741 also took the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment to render the product marketable to the consumer, shall amount to manufacture . 18. The question as to whether the process undertaken by Cipla would be cowered by the aforesaid Note 5 to Chapter 30 or not is purely a legal question. Since, the issue is purely a legal one, it cannot be contended by the Revenue that the credit was taken by Cipla for deriving any financial accommodation. 19. Cipla took proper legal advise and sought opinion of counsel who was a former senior officer of Central Excise department. Hence, no mala fide can be attributed to it. 20. The ld. Advocate also admitted an additional amount of Rs. 2,355/-towards duty liability for using Modvat credit on aluminium foils which went into refoiling those goods which were not manufactured products and therefore, not excisable. 21. The Revenue was represented by Shri M. S. Karandakad Rao, Dy. Commissioner (D) and Shri A. D. Pedkar, Superintendent from Commissionerate of Central Excise Mumbai-I. 22. The Revenue submitted that the applicants are liable to pay Rs. 98,24,286/- as duty of which the applicants can claim Rs. 68,l3,388/- as refund under the Central Excise Act/Rules. The Revenue s view was that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. This letter of the applicant remaining un-replied and the opinion of the expert further strengthened the perception of the applicant that this modus operandi was well covered by the law. Chapter Note 5 of Chapter 30 includes any other treatment to render the product marketable to the consumer and treats that treatment as amounting to manufacture. The goods in the warehouse were such which could not have been marketed at a lower price while that higher price was printed on the packing packing foils. Printing of reduced price through the process of defoiling and refoiling could be other treatment to render the product marketable to the consumer is not a point totally devoid of debatability. However, this argument is not pursued by the applicant and therefore, the Commission is not giving any finding on the same. 25. The tablet in bulk form or refoiled form were the goods on which Rs. 68,13,388/- had been paid by way of duty from the Modvat credit of Rs. 98,24,286/- which was the original duty on the said tablets paid by the applicant. 26. The Revenue categorically says all through the Show Cause Notice that no manufacturing process was involved on the goods when the same wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Duty :- An amount of Central Excise duty payable by he applicant in this case is Rs. 30,13,253/-. The applicant has already paid an amount of Rs. 30,10,898/-. The balance amount of Rs. 2,355/- shall be paid by the applicant within 30 days from the date of receipt of this order and proof thereof shall be produced before the Bench. 2. Penalty, Interest and Prosecution :- The Applicant has made a full and true disclosure of its duty liability and has co-operated with the Bench through out the course of the proceedings of this case. Hence, all the applicants are given full immunity from prosecution under the Central Excise Act, 1944. All the applicants are also granted full immunity from penalty under the Central Excise Act/Rules, 1944. So far as interest is concerned, Section 11AB of the Central Excise Act was inserted in September 1996 while the period of evasion is 1994. Hence, no interest can be levied on the applicant under the said Section by virtue of the Apex Court s decision in the case of Elgi Equipment reported at 2001 (128) E.L.T. 52 (S.C.). In terms of Section 11AA of the Central Excise Act, 1944 also no interest can be levied on the applicant because most of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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