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TMI Blog2003 (1) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... her manufacturers of P or P medicaments on loan licence basis which is permitted under the provisions of Drugs and Cosmetics Act and is prevalent on large scale in pharmaceutical industry; that they imported two consignments of bulk drugs for the manufacture of life saving drugs and availed exemption from payment of duty under Notification No. 23/98-Cus., dated 2-6-98 (Serial No. 46B); that the said Notification exempts duty if the imported goods are used in the manufacture of life saving drugs or medicaments specified in List 2 subject to the condition that they follow the procedure set out in the Customs (Import of goods at Concessional of Rate Duty for Manufacture of Excisable Goods) Rules, 1996; that in terms of Rule 3 of the said Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter, the finished goods have been manufactured out of the imported materials, in some other factory, recovery of duty under Rule 8 cannot be made inasmuch as it would not amount to misusing or mis-utilising the imported goods for any other purpose other than the intended purpose; that further the concept of manufacture on loan licence basis is an accepted principles of pharmaceutical industry; that the concept of loan licence manufacturer is also recognised under the provisions of Central Excise Act; that Section 2(f) of the Central Excise Act defines 'manufacturer' which shall include not only a person who employs a hired labour in the production or manufacture of excisable goods but also any person who engages in their production on his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the concessional rate are used for the intended purpose. If they have not been so used necessary action will be taken by the Assistant Commissioner of Central Excise to recover the differential duty." He mentioned that 1996 Rules is a complete code in itself, it is not open to the Commissioner of Customs having jurisdiction over the port of import to issue show cause notice. He relied upon the decision in the case of Samtel Color Ltd v. CCE, Meerut - 2000 (126) E.L.T. 1250 (T) wherein it has been held "the Assistant Commissioner of Central Excise had jurisdiction to issue notice for recovery of differential duty". 3.3 Finally the learned Advocate submitted that Section 111 of the Customs Act cannot be invoked in this case as none of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not for the Customs Authorities in West Bengal to do so". He finally submitted that as the goods were not used in their factory, the imported goods are liable for confiscation for mis-statement and penalty is imposable on the Appellants. 5.1 We have considered the submissions of both sides. The admitted facts are that the goods were imported by the Appellants which were cleared availing the benefit of Notification No. 23/98-Cus. (Serial No. 46B). This Serial Number exempts customs duty on import of "Bulk drugs used in the manufacture of life saving drugs or medicines at (A) above" (i.e. the life saving drugs or medicines specified in List 2) subject to the condition No. 5 of the Notification which reads as under : "If the importer fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not find any substance in these arguments. It goes without saying that the factory where the goods were manufactured out of the imported material was not the factory of the Appellants. They have had an arrangement to get the medicines manufactured therein. It is settled law that the supplier of raw material is not the manufacturer. Moreover, we observe from the Application given by them under the 1996 Rules to the Assistant Commissioner of Central Excise, that they have undertaken to use the imported goods at the factory premises at Delhi, namely B-1/E 12, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi-44. Thus it cannot be claimed by the Appellants that they have fulfilled the condition specified in the Notification. Non-f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would render the goods liable to confiscation under Section 111. The said 1996 Rules does not take away the right of the Customs Authority at the port of importation to demand duty and/or impose penalty on importer who has not complied with the conditions specified in the Notification and order confiscation of the goods in relation to which an offence has been committed. We are of the view that Rule 8 of 1996 Rules only empowers Assistant Commissioner of Central Excise to recover duty in addition to the Customs Authorities who are otherwise competent to recover the duty and impose penalty. The decision in Samtel Color Ltd. is not applicable as in that case the contention of the Appellants was that the Assistant Commissioner of Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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