M.J.Bio-Pharm Pvt. Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. I

APPEAL No.C/633/04, C/1271/06 & C/1240/08

(Arising out of Order-in-Appeal No.PD/21/Bel/2004 dated 29/03/2004, AT/705&706/BEL/2006 dated 18/11/2006 & AH/8/BEL/2008 dated 28/11/2008 passed by Commissioner of Central Excise (Appeals), Mumbai-II)

For approval and signature:

Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

M.J.Bio-Pharm Pvt. Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Mumbai

Appearance: Shri.Rajeev D Waghley, Advocate for appellant Shri.S.J. Shahu, Asst. Comm. (AR), for respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

Date of Hearing : 17/04/2015 Date of Decision : 17/04/2015 ORDER NO

Per: M.V. Ravindran

1. All these three appeals are disposed of by common order as the issue raised is the same and it pertains to the same assessee.

2. Heard both the sides and perused the records.

3. The issue involved in this case is regarding the demand of the Customs duty on the appellant on the quantity of raw materials which was imported in various consignments during the period 09/05/2002 to 19/03/2003. The appellant had imported the raw materials for manufacturing of life saving medicines, namely, insulin injection. It is the case of the Revenue that the appellant assessee are using 5 gms from each consignment for quality control test as samples and that the quantity of which is used in the quality control samples and for testing purposes are not used in the manufacture of final products, hence the quantity is not used for the intended purposes as per Notification No.21/2002-Cus dated 01/03/2002.

4. On deeper perusal of the records, we find that both the lower authorities are totally incorrect in passing the impugned orders and holding that the appellant is liable to pay differential Customs duty and not eligible for the exemption notification No.21/2002-Cus. First and foremost, we find that the goods which were imported were used as raw materials for life saving medicine, i.e. insulin injection. As per the Drugs & Cosmetic Act, every manufacturer of the medicines needs to draw samples of the raw materials and test the same as to whether it conforms to the standard of pharmacopeias. If the said samples are not tested, the appellant assessee would be falling foul with the provisions of Drugs and Cosmetics Act, which grant them licence to manufacture of medicines.

5. In our considered view, manufacturing of the final product as per Drugs and Cosmetics Act and Rules made thereunder cannot be undertaken unless the raw materials are tested for which sampling is undertaken in form of drawal of about 5 gms of raw material is starting stage of manufacturing activity. The purpose of the imported goods is for manufacturing of medicines which cannot take place unless the samples are drawn and tested. We find that the Honble Supreme Court in the case of BPL Display Devices Ltd. Vs. CCE  2004 (174) ELT 5 (SC) has settled the law as under:

The words for use used in similar exemption Notifications have also been construed by this Court earlier in the State of Haryana v. Dalmia Dadri Cement Ltd., 1987 (Suppl) SCC 679 to mean intended for use. According to this decision the object of grant of exemption was only to debar those importer/manufacturers from the benefit of the Notifications who had diverted the products imported for other purposes and had no intention to use the same for manufacture of the specified items at any stage.

6. It is to be held that raw materials testing process is the part of final manufacturing process and the raw materials cannot be issued to the manufacturing process without quality control test. Hence, quality control test is very much part of manufacturing process and integral to it. This our view is fortified by the following decisions:

a) Ferro Alloys Corp Ltd. Vs. CCE  1995 (77) ELT 302 (CEGAT Special Bench)

b) Hindalco Industries Ltd., Vs. CCE  1996 (88) ELT 519 (CEGAT  Del)

c) Sonarome Chemicals Pvt. Ltd. Vs. CCE  1998 (101) ELT 328 (CEGAT)

d) CCE Vs. Rajasthan State Chemical Works  1991 (55) ELT 444 (SC)

e) Ceat Tyres Ltd., Vs. UOI  1992 (62) ELT 517 (Bom)

7. In view of the foregoing, and judicial pronouncements, we hold that the impugned orders are unsustainable in law and are liable to set aside and we do so. The impugned orders are set aside and appeals are allowed with consequential relief, if any.

(Pronounced in Court)

(P.S. Pruthi) Member (Technical) (M.V. Ravindran) Member (Judicial)

pj

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