M/S Unisule Laboratories (P) Ltd vs Cce, Rohtak

[Arising out of the Order-in-Appeal No. 15/Comm./R.P./2006 dated 27/04/2006 passed by The Commissioner, Central Excise, Rohtak.]

For Approval and signature :

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1. Whether Press Reporters may be allowed to see :

the Order for publication as per Rule 27 of the

CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of :

the CESTAT (Procedure) Rules, 1982 for

publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair :

copy of the order?

4. Whether order is to be circulated to the :

Department Authorities?

M/s Unisule Laboratories (P) Ltd. Appellant

Versus

CCE, Rohtak Respondent

Appearance

Shri J.P. Kaushik, Advocate  for the appellant.

Shri M.S. Negi, Authorized Representative (DR)  for the Respondent.

CORAM: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 52241/2015 Dated : 13/07/2015

Per. B. Ravichandran :-

The appellants are engaged in the manufacture of medicines falling under Chapter 30 of the Schedule to the Central Excise Tariff Act, 1985. They are registered with Central Excise authorities and are availing benefit of exemption of 1st clearance of Rs. 30 lakhs. The present appeal is against the order of the Commissioner dated 27/4/2006. In the impugned order the learned Commissioner confirmed the demand of Rs. 7,81,799/- and imposed equal penalty. He dropped the demand of Central Excise duty of Rs. 23,01,680/-. The brief facts of the case are that the appellant is a manufacturer of medicine. A case was registered against them by the officials in October 1987 which resulted in the issue of show cause notice dated 01/3/99. The main allegation in the show cause notice was clearance of goods clandestinely under the cover of parallel invoices without payment of duty. The shortage of vials/ampoules found during the visit of the officers was also alleged to have been due to clandestine clearance. The case was adjudicated by the Commissioner vide order-in-original No. 60/2001 dated 07/12/01. On appeal by the appellant, the CESTAT vide final order No. A/1063/2002-NB (D) dated 26/9/02 remanded the matter for passing fresh order. The present impugned order is result of such remand proceedings.

2. The appellant contested the impugned order on the ground that the invoices relied on were only proforma invoices and these invoices also covered generic medicaments on which Central Excise duty chargeable was nil at that time. No segregation has been made between PP medicines and generic medicaments. On the issue of shortage of excisable items, the appellant pleaded that some of the quantities of their final products were found to be not as per the required standard and the same have been destroyed by the appellant as per the Drug Control Rules. They have paid the duty on the said destroyed items and entered in their RT-12 returns for the quarter ending September 1997. They have further pleaded that they have also exported medicines under ARE-4 and entries have not been made in RG-1 register. Even in the items found to have been in shortage both generic and PP medicines are there, the duty liability will not arise in respect of generic medicines as they carry nil rate of duty.

3. Learned Counsel for the appellant also produced a comparison chart regarding shortages of Ampoules and Vials which were found not entered in RG-1 register and also which were exported through ARE-4. He strongly pleaded that if considered as per the category of the medicines namely generic medicines and PP medicine, the demand could not have been confirmed and the duty liability on PP medicines would not also arise because of their total clearance not exceeding Rs. 30 lakhs.

4. Learned AR reiterating the findings in the impugned order and stated that while generic medicines are exempted in the tariff, duty has to be demanded on unaccounted/clandestinely cleared PP medicines even if the turnover is below Rs. 30 lakhs.

5. Heard both the sides and examined the appeal records. In the impugned order, the learned Commissioner has examined the duty demand on the goods covered by 17 invoices alleged to have been parallel invoices. While he held the duty amount of Rs. 1,38,912/- on goods covered by 17 parallel invoices is sustainable there was no discussion regarding the dutiablity of goods namely generic medicines or PP medicines in the said impugned order. He only observed that there is no logic or wisdom of clearing exempted goods on parallel invoices and the appellant also did not raise the issue during investigation. It is necessary to segregate dutiable PP medicines from exempted generic medicines for arriving at the correct duty liability in respect of goods cleared under the cover of parallel invoices. Similarly, regarding shortage of various types of medicines on physical verification vis-`-vis the RG-1 account, it is necessary to co-relate the destruction and export made under ARE-4 and clearances declared in RT-12 return with reference to dutiable or exempted medicines. These has to be done by Original Authority after due verification of records. As such it is found that it is a fit case for remanding the matter to the Original Authority to consider the above issue and pass the appropriate order after giving opportunity to the appellant to present their side of the case. The appeal is disposed of by way of remand.

(Operative part of the order pronounced in the open court.)

(Ashok Jindal)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

PK

??

??

??

??

2