Customs, Excise and Gold Tribunal - Mumbai
Cipla Ltd. vs Commissioner Of C. Ex. on 1 September, 2006
ORDER S.S. Sekhon, Member (T)
1. Heard both sides. The appellants are manufacturers of medicament. They cleared one such medicament viz Ciplox 750 mg tablets on payment of duty. Consequent to price reduction, they were required to show reduced MRP on such tablets, lying at various depots/warehouses and stockists. They decided to bring back such tablets and undertook the process of de-foiling and re foiling the same and printing new MRP required under the Rules. They took Modvat credit of the duty paid on Ciplox 750 mg tablets brought back and after de-foiling, they removed the goods at a lower MRP by paying duty once again, by considering the process of de-foiling and re-foiling as amounting to manufacture in terms of Note 5 to Chapter 30, where medicaments are classified.
2.They filed regular declarations in terms of Rule 57G by declaring Ciplox 750 mg as an input and re-foiling Ciplox has final product.
3. Similarly they also brought back Ciplo 250 mg and Ciplo 500 mg tables from warehouses/depots at their factory at Mumbai Central, where they undertook the process of de-foiling and re-foiling and indicated the revised MRP and filed necessary declaration under Rule57G declaring de-foiled packages and the Ciplox tablets in bulk as raw material. They removed the tablets de-foiled after claiming Modvat credit and while clearing the tablets, and bulk discharged duty free, the said credit availed at the de-foiling centre. At the re-foiling factory premises they took credit of such duty paid on the tablets brought in bulk from de-foiling centre and used the Modvat credit on discharge of duty when they removed the re-foiled tablets.
4. The lower authorities disallowed the credits taken by the appellants in such fashion. In the past this Tribunal vide final Order Nos. 1148-49, dated 5-6-1998 allowed an appeal on the ground of time bar since the department was fully aware of the fact that the appellants took Modvat credit of the duty paid medicament, received from the depots/warehouses and that the process undertaken by them on such medicaments was also made known to the department.
5. However, the appellants were issued with a notice to deny the Modvat credit taken at the re-foiling unit at the bulk tablets packed in drums received from their re-foiling centre. This credit was availed during the period April, 1994 to September, 1994 and the notice was issued on 18-2-1998.
6. The Commissioner disallowed the credit on the ground that the process undertaken did not amount to manufacture and Note 5 to Chapter 30 was not applicable to such process undertaken by the manufacturer. The demands were confirmed vide the order dated 20-1-2000 impugned invoking the extended period of limitation provided under Rule 571 read with Section 11A.
7. In May, 2003, in the proceedings initiated against the de-foiling centre and the denial of credit of Rs. 98,24,286/- was settled before the Settlement Commission, Mumbai.
8. After hearing both sides, in these appeals filed, we find that:
(a) For various reasons like price reduction etc., some time, the medicines already cleared to the depots are returned to the factory for the purpose of de-foiling and re-foiling the said medicines. The appellants have been following the procedure of bringing such duty paid medicines for the purpose of de-foiling/blister packing and putting the re-foiled tablets (bulk) into fresh blistered packing before putting them into cartons and declaring revised Maximum Retail Price (MRP) and clearing them on duty as applicable. The Drugs and Cosmetics Rules, 1945 (Rule 104A) does not permit, any person to alter, obliterate or deface any inscription or mark made or recorded by the manufacturers on the containers, labels or wrapper of any drug. Rule 104A thereof allows alteration of the inscription or mark made on the container or wrapper of any drug at the instance or direction or with the permission of licensing authority. However, a manufacturer can bring back the drug to his factory and change the packing itself for effecting the change in the MRP declared. Pursuant to the same, the appellants had undertaken the aforesaid activity of de-foiling and re-foiling of the medicines falling under Chapter 30 of the Central Excise Tariff Act, 1985 in order to imprint the revised price to make the product available to the consumers at a lesser MRP. The appellants were of the view that the said process undertaken by the appellants would amount to manufacture in terms of Chapter Note 5 to Chapter 30.
(b) the process undertaken by the appellants would amount to manufacture in view of Note 5 of Chapter 30 of the CETA, 1985, since the process involved is the same on which originally Excise duty was levied and discharged i.e. packing and re-packing and re-labelling; and under identical circumstances, the Tribunal in Mackods Pharmaceuticals Ltd. v. CCE has held that such process would amount to manufacture. We have no reason to disagree.
(c) This demand is barred by limitation under Rule 57I as well as under Section 11A, since the appellants have specifically filed declarations indicating the input as Ciplox tablets (bulk) and the final product as Ciplox in 10's which is apparent from the declarations filed. The fact that Modvat credit was to be availed was therefore held is the invoices on which credit was availed at their foiling centre was based on documents issued by de-foiling centre and these invoices clearly indicate that the Ciplox Tablets were packed in bulk and such bulk packed foils and ten tablets each have been re-packed. Therefore, we find that fresh levy at the re-foiling centre cannot be attracted under the provisions of the Act, and in any case, there is no case or cause to call for any suppression of facts and or reasons to invoke the proviso clause of Section 11A and Rule 57I in the facts of these cases.
(d) These proceedings initiated against the appellants are only from the very said ground for the period April, 1993 to May, 1993 which has been held to be barred by limitation vide order Nos. 1148-49/98, dated 5-6-1998 and that decision would call for also supporting the case of bar of limitation in the facts herein.
9. In this view of the matter, we find no reason to uphold the order of the lower authority denying the credit and, or penalty as arrived at by the lower authority. The same are set aside and the appeals are allowed.
(Pronounced in Court on 1-9-2006)