9911796707
TMI Blog2015 (2) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... o come within the purview of the said definition. In other words, the expression 'manufacture' used in the aforesaid exemption notification has to be understood in terms of the Exim Policy 2002-2007 and not in terms of the Central Excise Act or the definitions thereunder. The requirement of the notification is manufacture and export of 'goods' and not repeat not manufacture of 'excisable goods'. The definition of manufacture under section 2(f) of the Central Excise Act, 1944, applies when 'excisable goods' are involved and not otherwise. We have also perused some of the advance licences issued to the appellant. Thus from the advance licences issued to the appellant importer, there is no violation of any of the conditions stipulated either in the licence or in notification No. 47/2002-Cus and therefore, denial of exemption to the appellant in the impugned order is prima facie unsustainable in law and we hold accordingly. We further notice that the issue whether compacting amounts to 'manufacture' was specifically examined by a Committee consisting of officers from DGFT, Dept. of Industrial Promotion & Policy and Dept. of Pharmaceuticals. This Committee in the meeting held o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials to M//s NGDH and buyers of the finished goods from M/s La Cure Pharmaceuticals Ltd. in each of the case. Aggrieved of the same the appellants are before us. 2. The facts relevant to the case are as follows. M/s. NGDH had imported bulk drugs, through high seas sale, by availing the benefit of notification No. 47/2002-Cus under the cover of advance licences issued to them. As per the terms and conditions of the licence, they were required to manufacture Drug formulations dispersible/Soluble Powder and Granules . M/s NGDH undertook compaction of the bulk drugs and cleared the compacted drug to M/s La Cure Pharmaceuticals Ltd. (M/s La Cure in short), a 100% EOU as 'deemed exports' without payment of any duty, by classifying the goods under Chapter 38 of the Central Excise Tariff. Most of these bulk drugs were sold by M/s La Cure to the high seas seller of bulk drugs to M/s NGDH, namely, M/s Ruskin Chemie Pharma, Mumbai, M/s Morepen Laboratories, New Delhi, M/s Ankur Drgus and Pharma Ltd., Mumbai and M/s G.C. Chemie Pharma Ltd., Mumbai and payments to be made by M/s La Cure to M/s NGDH were offset against payments to be made by the latter to the high seas sellers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant had undertaken was compact granulation, which as per technical literature is a well-recognized process. (2) As per the Advance Licences issued to the appellant, the appellants were permitted to import relevant bulk drug tand the finished product required to be exported was Drug formulation dispersible/Soluble Powder and Granules (Compacted) . The appellant had fulfilled the export obligation by undertaking deemed exports by way of supply to a 100% EOU, namely, M/s La Cure Pharmaceuticals. The compacted granules were cleared as deemed exports without payment of duty to M/s La Cure under cover of AR 4, duly permitted and certified by the jurisdictional range Superintendent at Daman. Thus, the entire activity undertaken by the appellant was clearly known to the department and there was no suppression of facts on the part of the appellant. (3) Notification 47/2002-Cus grants exemption to materials required for the manufacture of the final goods and 'final goods' is defined in the said notification vide Explanation (iii) to include supplies made to 100 percent Export oriented units(EOUs) or units located in Export Processing Zones (EPZ) or Special Economic Zon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicating authority. He submits that a conspiracy was hatched by the importer appellant along with 100% EOU and high seas sellers to evade customs duty by undertaking a process which did not amount to 'manufacture' and re-supplying the same goods back to the high seas sellers without payment of customs duty on the raw materials and excise duty on the finished products. This is a novel modus operandi adopted by the appellants to defraud the exchequer. Accordingly he pleads for putting the appellant to terms. 5. We have carefully considered the submissions made by both the sides. 5.1 It will be useful at this juncture to peruse notification No. 47/2002-Cus, the relevant portions of which are reproduced below: .. the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts materials required for the manufacture of the final goods when imported into India, from whole of the duty of Customs leviable thereon, under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), and from the whole of the additional duty leviable thereon under section 3 of the said Customs Tariff Act subject to the following conditions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through any of the airports at Ahmedabad Bangalore, Mumbai, Kalkatta, Bhubaneshwar, coimbnatore, Nagpur, cochin, Delhi, Hyderabad, jaipuir, China,Srinagar, Trivandrum and Varanasi for through any of the Inaldn container deports at banga,ore, coimbatore Delhi, Ghuwati, Hyderabad, Kanpur, Ludhiana, Moradabnad, Pimpri9Pune), Pitampur(Indore), Agra, Faridabad, jaipur, guntur, nagpur, Varanasi, Surat, Jodhpur,Salem. Tirpur, Sinanallur,Walluj, Bhiwadi, Malanpur, nasik, Rudrapur (Nainital), Dighi(Pine) Vadodara, Daulatabad(Wanjar) Waluj, Kota, Udaipur, Ahmedabad, Jalanhdhar, Bhilwars, Pondicherry and Garhi Harsaru or through Land Customs Stations at Ranaghar and singhabad provided that the commissioner of Customs may be special order and subject to such conditions as may be specified by him, permit import and export through any other sea port, airport or inland container depot or through a land customs station- Explanation - In this notification (i) Licensing Authority' for General of Foreign Trade appointed under Section 6 of the Foreign Trade (Development and Regulation)Act. 1922 (22 of 1992) or an officer authorized by him to grant a licence under the said act; (ii) Mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Export and Import Policy' means Export and Import Policy 2002-2007, notified vide Notification No. 1 / 2002-2007, dated the 31 st march, 2002 5.2 From a reading of the notification, the following picture emerges. The exemption is on materials required for the manufacture of final goods. The imported goods should be covered under an Advance Licence for deemed exports issued in terms of para 4.1.1 of the Exim Policy 2002-2007. Final goods means supplies made, inter alia, to 100% EOUs. Once these substantive conditions are satisfied, the exemption is available. It is not the contention of the Revenue that any of these conditions are satisfied, the exemption is available. It is not the contention of the Revenue that any of these conditions have been violated. 5.3 It would also be useful to look at the policy provisions as they stood at the relevant point of time. Relevant Extracts from Exim Policy 2002-2007 are reproduced below: 4.1 The Duty Exemption Scheme enables duty free import of inputs required for export production. An Advance Licence is issued under Duty Exemption Scheme 4.1.1 An Advance Licence is issued to allow duty free import of inputs, which are physica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the main/ sub-contractors shall be regarded as Deemed Exports under this Policy, provided the goods are manufactured in India: (a) Supply of goods against Advance Licence/Advance Licence for annual requirement/DFRC under the Duty Exemption /Remission Scheme; (b) Supply of goods to Export Oriented Units (EOUs) or units located in Special Economic Zone (SEZs) or Software Technology Parks (STPs) or Electronic Hardware Technology Parks (EHTPs); (c) Supply of capital goods to holders of licences under the Export Promotion Capital Goods (EPCG) scheme; 9.30 Manufacture means to make, produce, fabricate, assemble, process or bring into existence, by hand or by machine, a new product having a distinctive name, character or use and shall include processes such as refrigeration, re-packing, polishing, labelling. Manufacture, for the purpose of this Policy, shall also include agriculture, aquaculture, animal husbandry, floriculture, horticulture, pisciculture, poultry, sericulture, viticulture and mining 5.4 From the policy provisions discussed above, advance licenses can be issued for duty free import of materials required for the manufacture and deemed export of final goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Drugs and Cosmetics Rules also, the activity undertaken by the appellant amounts to 'manufacture'. 5.7 We further notice that the issue whether compacting amounts to 'manufacture' was specifically examined by a Committee consisting of officers from DGFT, Dept. of Industrial Promotion Policy and Dept. of Pharmaceuticals. This Committee in the meeting held on 21-12-2010 concluded that the compacting process is a manufacturing process in itself which is intermediate stage before making a tablet. Thus when all the concerned authorities have held the process of compaction to be 'manufacture', we do not understand how the customs authorities can take a different view. 5.8 We further notice that the entire activity and supply by way of deemed exports have been undertaken with the full knowledge and approval of the central excise department. Therefore, the question of suppression of any facts or willful mis-statment of facts enabling invocation of extended period of time would not arise at all in the facts of the case before us. 5.9 As regards the charge of aiding and abetting by the co-appellants, we do not find any evidence led by the Revenue in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
