Mistair Health & Hygiene Pvt. Ltd vs Commissioner Of Central Excise, ...

(Arising out of Order-in-Appeal No. PII/PAP/190/2009 dt. 11.9.2009 passed by the Commissioner (Appeals) Central Excise, Pune-II )

For approval and signature:

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

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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 : No 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?

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Mistair Health & Hygiene Pvt. Ltd. : Appellant

VS

Commissioner of Central Excise, Pune-II : Respondent

Appearance

Shri Makarand Joshi, Advocate for Appellant

Shri K.S.Mishra, Addl. Commissioner (A.R) for respondent

CORAM:

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

Date of hearing : 30/06/2015 Date of decision : 30/06/2015

ORDER NO.

Per : M.V. Ravindran

This appeal is directed against Order-in-Appeal No. PII/PAP/190/2009 dt. 11.9.2009 vide which the adjudicating authority has upheld the order in original holding that appellant is liable to pay the service tax, interest thereof and penalties.

2. The brief facts involved in the appeal are that the appellant, who is a holder of Central Excise Registration was engaged in the manufacture of pharmaceutical products falling under Chapter heading No.30 of the CETA, 1985; that the appellant entered into an agreement dated 1.11.2005 with M/s. Bayers Pharmaceuticals Private Ltd, Mumbai for manufacture of the product called Bayer Tonic II on job work basis; that the product Bayer Tonic II was an alcoholic preparation which was not covered under the Central Excise Tariff Act and accordingly, the activity of manufacture of the said product for other persons attract service tax under the taxable category of Business Auxiliary Service (BAS in short) ; that since the Bayer Tonic II is non-excisable product, the activity does not amount to manufacture under the definition of manufacture given under Section 2 (f) of the Central Excise Act, 1944; that on the above facts, a SCN dated 6.7.2007 was issued informing the appellant that the service rendered by him is rightly falling under BAS and accordingly, for the consideration of Rs.41,97,892/- received during the period from 31.7.2006 to 30.3.2007, the appellant is liable to pay the service tax under BAS and accordingly, the appellant was directed to show cause as to why the service tax of Rs.5,13,822/- should not be recovered under Section 73 (1) of the Finance Act, 1994 (hereinafter referred as the Act), interest under Section 75 of the Act should not be recovered and penalty under Section 76 and 77 of the Act should not be imposed; that on adjudication, the demand raised in the SCN was confirmed along with interest, in addition to imposing penalty under Section 76 and 77 equal penalty under Section 78 of the Act.

3. Aggrieved by such an order appellant filed an appeal before the first appellate authority. After following the due process of law the first appellate authority rejected the contentions and upheld the demands with interest and penalties.

4. Learned advocate appearing on behalf of the appellant after taking us through the facts of the case and the records, would submit that the entire issue is whether medicaments containing alcohol would be not amounting to manufacture and hence liable for service tax under business auxiliary services. He would submit that the medicines manufactured by the appellants undoubtedly arise out of manufacturing process. He would submit that since the definition of business auxiliary services excludes any activity that the amounts to manufacture as per provisions of section 2 (f) of Central Excise act, 1944, does not mean that medicines containing alcohol are not manufactured items. He would submit that the issue is now squarely settled by the judgement of Tribunal in the case of Rubicon formulations Pvt. Ltd., Vs. C.C., C.E. & S.T., Aurangabad 2010 (19) S.T.R. 515 (Tri.- Mumbai) and Midas Care Pharmaceuticals Vs. Commr. Of C. Ex. Aurangabad 2010 (18) STR 768 (Tri-Mumbai). It is also his submission that the first appellate authority in the subsequent matters of the appellant has followed the law settled by the Tribunal and given them relief draws our attention to the said decisions.

5. Learned departmental representative would reiterate the findings of the lower authorities.

6. We heard both sides and perused the records.

7. The issue involved in this case is whether manufacturing of medicines containing alcohol is not amounting to manufacture and liable for service tax under business auxiliary services or otherwise. It is undisputed that appellant is manufacturer of medicines which contains alcohol. The exemption from payment of service tax is available to a job worker as if the activity amounts to manufacture of excisable goods; the products manufactured containing alcohol is not covered under the Central Excise tariff Act.

8. It is noticed from the records that both the lower authorities have categorically held that the appellant is undertaking manufacturing of medicines containing alcohol as a job worker from the raw materials received from the principal. It is a case of the revenue that the exemption granted from payment of service tax under business auxiliary services can be claimed only if the assessee is manufacturing excisable goods. The interpretation given by the lower authorities is totally incorrect for more than one reason. Firstly, the basic thrust of the revenue that the activity of manufacturing is not there, is in itself on wrong footing inasmuch that the medicines manufactured by the appellants are as per the provisions of Drugs and Cosmetic Act and the Rules made thereunder; if that be so it cannot be held that there was no manufacture of excisable goods. Secondly, the products manufactured by the appellant are chargeable to Excise duty which can be levied by the state as per list to the 7th schedule under article 246 of the constitution of India; entry is listed is at serial number 50 of list 2. Thirdly, the issue is now squarely settled by the decision of the Tribunal in the case of Rubicon formulations (supra) and Midas care Pharmaceuticals (supra). We also find that the first appellate authority has, in subsequent proceedings of the very same appellant, has allowed the appeals and we were informed that the revenue has not challenged the said decisions.

9. In view of the foregoing and the authoritative judicial pronouncements we find that impugned order is unsustainable and is accordingly set aside. The impugned order is set aside and appeal is allowed.

(Pronounced in court)

(P.S.Pruthi) Member (Technical)

(M.V. Ravindran) Member (Judicial)

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