Customs, Excise and Gold Tribunal - Tamil Nadu
Cipla Ltd vs Commissioner Of Customs on 13 August, 2007
Equivalent citations: 2007(122)ECC433, 2007(148)ECR433(TRI.-CHENNAI), 2007(218)ELT547(TRI-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The appellants in these appeals had imported certain bulk drugs and filed Bills of Entry in the months of August and October 2006 for clearance thereof. They did not claim the benefit of any exemption Notification. The Bills of Entry were assessed to duties of Customs on merits and the goods were accordingly cleared on payment of the duties. Subsequently, the assessee noticed that they could claim the benefit of Notification No. 21/2002-Cus. (Sl. No. 80 read with List No. 3) in respect of Basic Customs Duty (BCD) and the benefit of Notification No. 4/2006-CE (Sl. No. 47) in respect of countervailing duty (CVD). On this basis, the appellants wanted the assessments to be revised with consequential refund of differential duty. They preferred appeals against the assessments to the Commissioner (Appeals). The appellate authority found that the goods imported by the appellants figured in list No. 3 attached to Sl. No. 80 of Notification No. 21/2002. It, however, did not accept the appellants' argument based on the Drugs (Prices Control) Order 1995 that a 'bulk drug' was also a 'drug' and, therefore, the subject goods were eligible for the benefit of Sl. No. 80(A) of the above Notification. The appellate authority held that the Notification treated 'drugs' and 'bulk drugs' differently and that, where it was admitted by the assessee that the goods imported by them were bulk drugs, such goods would get covered under Sl. No. 80 (B) of the above Notification. As the condition which was attached to that entry (condition No. 5) had not been complied with by the assessee, they would not be entitled to the benefit of the Notification. The condition was that the importer should follow the procedure set out in the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules 1996. The appellate authority observed that this condition had been stipulated to ensure that medicines in dosage form were manufactured from the imported bulk drugs under Central Excise supervision and that there was no misuse of the imported goods by the importer after availing the exemption. In this interpretation of the Notification, ld. Commissioner (Appeals) held that the benefit of exemption under Sl. No. 80 (A) was not admissible to the subject goods which were not 'drugs' on account of the fact that they were not capable of direct use. He, further, held that the benefit of exemption under Sl. No. 80 (B) of the Notification was also not admissible on account of non-compliance with condition No. 5. In the result, in respect of all the Bills of Entry barring one (Bill of Entry No. 184992 dated 3.7.2006), the assessee's appeals were dismissed on merits. As regards the said Bill of Entry No. 184992 dated 3.7.2006, the assessee's appeal was dismissed on the sole ground of limitation. Appeal No. C/100/2007 before us is against such dismissal of appeal as time-barred. The remaining appeals before us are against the appellate Commissioner's order affirming the assessments of other Bills of Entry on merits.
2. After examining the records and hearing both sides, we note that it is not in dispute that the goods imported by the appellants were 'bulk drugs'. The entries against Sl. No. 80 of the Table annexed to Notification No. 21/02-Cus. are as follows :
S. No. Chapter or Heading No. or sub-heading No. Description of Goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 80 28, 29 or 30 The following goods, namely :
(A) Drugs, medicines, diagnostic kits or equipment specified in List 3 5%
-
-
(B) Bulk drugs used in the manufacture of drugs or medicines at (A) above 5%
-
5It is not in dispute that all the goods imported by the appellants found mention in List 3 referred to at Sl. No. 80 (A) above. The relevant entry in the Central Excise Notification (No. 4/2006 dated 1.3.2006) is also reproduced below :
S. No. Chapter or Heading or sub-heading or tariff item of the First Schedule Description of excisable goods Rate Condition No. (1) (2) (3) (4) (5) 47 28, 29, 30 or 38 The following goods, namely :
(A) Drugs or medicines including their salts and esters and diagnostic test kits, specified in List 3 or List 4 appended to the notification of the Government of India in the erstwhile Ministry of Finance (Department of Revenue) No. Nil
-
21/2002-Customs, dated the 1st March, 2002 (G.S.R. 118 (E), dated the 1st March, 2002.
(B) Bulk drugs used in the manufacture of the drugs or medicines at (A) above Nil 2 As per condition No. 2 shown above, the assessee was required to follow the procedure laid down in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 so as to be eligible for the benefit of Sl. No. 47(B) of the Central Excise Notification.
3. One of the reasons cited by learned JDR for denying the benefit of the Notifications to the appellants is that they did not claim such benefit at the time of imports. This view cannot be upheld as it is settled law that the benefit of an exemption Notification can be claimed at appellate stage also vide Share Medical Care v. Union of India .
4. The substantive question to be considered in these appeals is whether the goods imported by the appellants can be considered to be 'drugs' within the meaning of this term figuring at Sl. No. 80 (A) of the Customs Notification as well as at Sl. No. 47(A) of the Central Excise Notification. The lower appellate authority has held the goods to be 'bulk drugs' under Part B of the description of goods against Sl. No. 80 of the Customs Notification in contradistinction with 'drugs' mentioned in Part A. The authority, accordingly, denied the benefit of the Notification to the assessee on the ground of non-compliance with the relevant condition. According to the appellants, 'bulk drugs' are also 'drugs' and, where they find mention in list 3 appended to the Customs Notification, the benefit of Sl. No. 80 (A) of the Notification should be extended to them. In this connection, their counsel has referred to the definitions of 'drug', 'bulk drug' and 'formulation' given in the Drugs (Prices Control) Order 1995. Ld. counsel has also submitted that a similar dispute in relation to Sl. No. 43 of Central Excise Notification No. 11/97 was considered by the West Zonal Bench (WZB) of the Tribunal in Order No. A/461 and462/2007 dated 20.6.2007 in the case of Burroughs Wellcome (I) Ltd. Pfizer Ltd. v. Commissioner of Central Excise and Customs, Mumbai Appeal Nos. E/1665/2000 andC/1156/2001 and it was held that, inasmuch as the goods in question were specifically mentioned in list 2 annexed to Sl. No. 43A of the Notification, the benefit of the said entry would be admissible to the assessees. The relevant portion of Notification No. 11/97-CE considered by WZB is reproduced below :
Sr. No. Chapter or heading No. or subheading No. Description of goods Standard Rate Additional duty Rate Condition No. 43 28, 29, 30 or 38 The Following goods, (A) The life saving drugs or medicines (including diagnostic test kits) specified in List 2.
Nil Nil
-
(B) Bulk drugs used in the manufacture of life saving drugs or medicines at (A) above.
Nil
-
-
(C) Other life saving drugs or medicines Nil Nil 7 M/s. Burroughs Wellcome (I) Ltd. had imported Polymyxin B Sulphate and used the same along with some other ingredients in the manufacture of Neosporin. M/s. Pfizer Ltd. had imported Cefoperazone Sodium and used the same for manufacture of Cefoperazone Sodium Injections. The issue before the Tribunal was whether the above parties were eligible for the benefit of exemption from payment of CVD on the items imported by them, under Sl. No. 43 (A) of Notification No. 11/97-CE and under the corresponding entries of successor Notifications. It was not in dispute that the imported items figured in List 2 appended to Sl. No. 43 (A) of the above Notification. While the Revenue classified the goods as 'bulk drugs' under Sl. No. 43 (B), the assessees classified them as life saving drugs under Sl. No. 43 (A). The Tribunal accepted the assessees' contention and held that the drugs imported by them were to be categorized under Sl. No. 43(A) inasmuch as they found mention in list 2. It was further held that, as Sl. No. 43 (A) was more beneficial than 43 (B), the assessee was not precluded from claiming such benefit at a later stage. It is settled law that, where two exemption Notifications are applicable to a given goods which is otherwise chargeable to duty, the assessee is entitled to avail the benefit of that Notification which is more beneficial vide Indian Oil Corporation Ltd. v. CCE - , CCE v. Indian Petrochemicals and H.C.L. Ltd. v. CC 2001 (130) ELT 405 (SC). Applying the same principle, we hold the view that, if two entries in an Exemption Notification are applicable to a given goods, the assessee can legitimately claim under the more advantageous entry. Therefore, we are inclined to follow, with approval, the view taken by the co-ordinate Bench in the case of Burroughs Wellcome (I) Ltd. andPfizer Ltd.
5. In the instant case, admittedly, the 'bulk drugs' imported by the appellants were specifically mentioned in List 3 appended to Sl. No. 80(A) of Customs Notification No. 21/02 and are liable to be considered as 'drugs' mentioned at 80(A). It is beyond doubt that 'bulk drugs' are also 'drugs'. They are so defined under the Drugs (Prices Control) Order 1995 also. The imported goods, which are specified in List 3, must fall within the coverage of "drugs specified in List 3" and consequently the benefit of Sl. No. 80(A) would be admissible to them in relation to BCD. It would follow that, insofar as CVD is concerned, the benefit of Sl. No. 47(A) of the Central Excise Notification would be available to the goods. We have taken this view upon strict interpretation of the language used in the description of goods under the relevant entries of the Notification, in terms of the apex court's ruling in Gujarat State Fertilizers Co. v. CCE 1997 (91) ELT 39(SC) and other cases cited by learned DR. In the result, all the appeals filed against the appellate Commissioner's order on merits are bound to succeed.
6. In appeal No. C/100/2007, the challenge is against the appellate Commissioner's order dismissing the assessee's appeal as time-barred. The relevant Bill of Entry was assessed on 4.7.2006 and the duty was paid on 6.7.2006. A copy of the assessed Bill of Entry, generated in EDI system, duly authenticated by the assessing authority, was delivered to the assessee on 2.8.2006. The appeal against the assessment was filed with the Commissioner (Appeals) on 9.10.2006. On these facts, after hearing both sides and considering their submissions, we are of the view that any delay of the assessee's appeal before the Commissioner (Appeals) should be reckoned with reference to 2.8.2006, the date on which the assessment order (appealable order) was supplied to the assessee. This view gets support from the Hon'ble Madras High Court's judgment in Redington India Ltd. v. Commissioner, 2007 (212) ELT 187 (Mad.). In the result, the relevant appeal of the assessee before the lower appellate authority was well within the condonable period of delay. We are of the considered view that the short delay of a few days ought to have been condoned by the appellate authority. We condone the same. Further, having already held the substantive issue in favour of the assessee, we must allow appeal No. C/100/2007. It is ordered accordingly.
7. In the result, the impugned orders are set aside and these appeals are allowed.
(Pronounced in open court on 13.8.07)