Custom, Excise & Service Tax Tribunal
C.C.E Jaipur-I vs M/S. Allied Chemicals & ... on 6 May, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/2791-2793/2006 -Ex[DB]
[Arising out of Order-In-Appeal No. 180-182(MPM)CE/JPR-I/2006 dated 25.05.2006 passed by Commissioner (Appeals) Jaipur-I]
For approval and signature:
Hon'ble Mr. Rakesh Kumar, Member (Technical)
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
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 should 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 Departmental authorities?
C.C.E Jaipur-I ...Appellant
Vs.
M/s. Allied Chemicals & Pharmaceuticals (Pvt.) Ltd. Respondent
Appearance:
Mr. MS Negi DR for the Appellant Mr. B.L. Narsimhan, Advocate for the Respondents CORAM:
Hon'ble Mr. Rakesh Kumar, Member (Technical) Hon'ble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing/decision.06.05.2015 FINAL ORDER NO. 51648-51650 /2015-Ex(Br) Per Rakesh Kumar (for the Bench):
The facts giving rise to filing of these appeals are, in brief, as under.
1.1 The respondents are manufacturer of pharmaceuticals products. The period of dispute in this case is 01.07.2004 to 31.03.2005. The point of dispute in this case is as to whether the pharmaceutical product, which is a formulation of Diphenoxylate Hydrochloride with Atropine Sulphate is covered for full duty exemption under notification no. 6/2002-CE dated 1.3.2002 (serial No. 57) which covers formulations manufactured from bulk drugs specified in list 2. The list-2 of the notification mentioned various bulk drugs including Atropine but it did not cover by Diphenoxylate Hydrochloride. As per the explanation to serial no. 57 of the notification for the purpose of this notification the expression Formulation means medicaments processed out of or containing one or more bulk drugs with or without the use of any pharmaceuticals aids such as dilutents, disintegrating agents moistening agents, lubricants, buffering agents, stabliser or preserver which are therapeutically inert and do not interfere with the thearpeutical or prophylactic activity of the drug for internal or external use of diagnosis, treatment, mitigation or prevention of disease in Human being or animals but shall not include any substance to which the provisions of drugs and cosmetics act 1940 do not apply. The department in respect of the formulation with Diphenoxylate Hydrochloride with Atropine Sulphate was of the view that the same is not covered by serial no. 57 of the notification no. 6/02-CE as the bulk of the constituent of the formulation is Diphenoxylate Hydrochloride which is not figuring in list-2. It is on this basis that that in respect of the formulation of Diphenoxylate Hydrochloride with Atropine Sulphate, the Original Adjudicating Authority denied the duty exemption and confirmed the duty demand of Rs. 38,06,722/- along with interest and imposed equal amount of penalty under section 11AC and also penalty of Rs. 20,000 each on the two Directors, namely, Sh. Sudhir Gupta and Sh. Saurabh Gupta under Rule 26 of the Central Excise Rules 2002.
1.2 On appeal being filed to Commissioner (Appeals) against this order of the original adjudicating Authority, the Commissioner (Appeals) set aside the order in original and allowed the appeals vide order in appeal dated 25.05.2006 holding that the respondent company would be eligible for the duty exemption under notification no. 6/02-CE (serial no. 57) in respect of formulation of Diphenoxylate Hydrochloride with Atropine Sulphate. Against this order of the Commissioner (Appeals) the Revenue is in Appeal.
2. Heard both the sides.
3. Sh. MS Negi, the Ld. DR, assailed the impugned order by reiterating the grounds of appeal and pleaded that the formulation, in question, consists mainly of Diphenoxylate Hydrochloride whose proportion is about 99% by weight and only the remaining 1% ingredient is Atropine Sulphate, that since the bulk drug - Diphenoxylate Hydrochloride is not mentioned in list-2 of the notification no. 6/02-CE and list-2 covers only the minor ingredient Atropine, the formulation, in question, would not be covered by this exemption notification, that the finding of the Commissioner (Appeals) in the impugned order that to avail of the benefit of the said exemption notification, the formulation should have been manufactured from the bulk drug specified in the list-2 of the said notification and the quantity ratio with other drugs and activeness of the said drugs is not relevant, is not correct, that since Diphenoxylate Hydrochloride is the main component 99% by weight, the formulation, in question, cannot be treated as the formulation manufactured from the bulk drug specified as the Diphenoxylate Hydrochloride is not mentioned in list-2 and that in view of this, the impugned order is not correct.
3. Sh. B L Narsimhan, Advocate, the Ld. Counsel for the respondent pleaded that the issue involved in this case stands decided by the Apex Courts judgment in the case of CCE Varodara vs Allembic Chemical Works reported in 2015-TIOL-76-SC-Cx wherein the Apex Court while interpreting the provisions of a similar exemption notification no. 8/95-CE dated 09.02.1995 held that Streptomycene injection is a formulation consisting of streptomyciline and penecyciline would be eligible for exemption even if the penecyciline was not mentioned in the list of the bulk drugs annexed to the notification, that for a formulation, the ratio of the constituent bulk drugs is not relevant and if a particular formulation is made from more than one bulk drug and any one of the bulk drug figures in the list-2 of the exemption notification, the formulation would be covered for exemption under this notification. He, therefore, pleaded that there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records. The dispute is about the eligibility for exemption under notification no. 6/02-CE (serial No. 57) of a formulation made from two bulk drugs - Diphenoxylate Hydrochloride with Atropine Sulphate. Serial No. 57 of the notification no. 6/02-CE covers formulation manufactured from bulk drugs specified in list-2. In terms of explanation to this serial no., the formulation can be the medicament containing one bulk drug or more than one bulk drug with or without the use of the pharmaceutical aids such as dilutents, disintegrating agents, moistening agents, lubricants, buffering agents, stabilizer or preserver which are therapeutically inert and do not interfere with the thearpeutical or prophylactic activity of the drug. The list-2 of the exemption notification covers only Atropine and does not cover Diphenoxylate Hydrochloride. The Departments contention is that Diphenoxylate Hydrochloride being the major constituent about 99% by weight, the formulation has to be treated as made out of this bulk drug i.e. Diphenoxylate Hydrochloride and since this bulk drug is not mentioned in list- 2, the formulation is not covered by serial no. 57 of the exemption notification. The Commissioner (Appeals) has held that since both Diphenoxylate Hydrochloride and Atropine Sulphate are active ingredients and since Atropine Sulphate is mentioned in list-2, the formulation would be eligible for exemption as for this purpose the ratio of the two constituent bulk drugs is not relevant. Since, in the present case both the constituents bulk drugs - Diphenoxylate Hydrochloride and Atropine Sulphate are the active ingredients, in our view the Commissioner (Appeals)s order that their ratio in the formulation is not material is correct. In terms of the Apex Court judgment in the case of CCE Varodara vs Allembic Chemical Works (supra) if a formulation consist of more than one bulk drug, and out of those bulk drugs only one bulk drug is specified in notification the duty exemption to the formulation cannot be denied. On going through this judgment of the Apex Court, we are of the view that the judgment of the Apex Court is squarely applicable to the facts of this case. We, therefore, do not find any infirmity in the impugned order. The Revenues appeals are, therefore, dismissed.
(Dictated and pronounced in open court) (S.K. Mohanty) (Rakesh Kumar) Member(Judicial) Member(Technical) Neha Page | 1