Customs, Excise and Gold Tribunal - Mumbai
C.J. Gelatine Products Ltd. vs Commissioner Of Central Excise on 7 July, 2005
ORDER S.S. Sekhon, Member (T)
1.1 Appellant was served with a Notice proposing to recover duty on goods (Gelatin Capsules) cleared by them after reprocessing during the period 1.3.1997 to 20.1.1998 on the grounds that no reprocessing under Rule 173H was conducted but it was a case of replaced goods cleared as the process allegedly of reprocessing conducted amounted to manufacture.
1.2 The demands of duty were confirmed and penalty imposed under Rule 173Q. CCE (A) in appeal found:
"I observe that the duty paid goods received by the appellants, have undergone several process such as blending, mixing, repacking, etc. Appellants in their statement recorded under Section 14 of CEA 1944 before the Central Excise authorities have admitted that if there is a problem of viscosity or so contents then they add some other gelatine and reblend the whole material to get required specifications, if the complain is about moisture contents, then the Heat treatment is required and carried out. To remove the bacterial contamination material is reproduced and as per requirement material is rebelended, and serial repacked. They have also stated that new lot/blend numbers and serial number are allotted to repacked material.
As per provision of Rule 173H an assessee may subject to such condition as may be prescribed by the Commissioner bring into his factory excisable goods accompanied by duty paid documents for being remade refined, reconditioned, repair or subjected to any similar process in the factory and the same can be removed from the factory without payment of duty if not subjected to any process amounting to manufacture.
Further CEGAT in (1998 (99) ELT 306 (T) in the case of Z.A. Enterprises CCE Meerut have observed that if the return goods are subjected to process similar to that of manufacture of the original goods. benefit under rule 173H would not be applicable to them and goods are liable to duty."
& since the defective goods were subjected to process of manufacture, benefit of Rule 173H was held to be not eligible. Hence this appeal.
2.1 The appellants are manufacturers of gelatin capsules and the only method by which the defects could be removed was the manner of process as undertaken is not denied by both sides.
2.2 That there is an ambiguity in rule 173H because what is permitted by sub rule (1) has been disallowed by sub rule (2) was reckoned by the bench in the case of CC v. JG Glass Ltd (1988 (37) ELT 248 (Tri-NRB). However, the Bench allowed the remelting of glass vials and recreating the same to be an activity covered by the rule. The rule itself does not provide for the meaning of the words Reconditioning/remelting/repair etc that are permissible. The Chambers Twentieth Condensed Dictionary define the same to encompass the restoration of the original to sound condition & remake to do anew a thing over again from original material (see. Hindustan Motors Ltd 1992 (62) ELT 66 at 71) approving the definition in the Dictionary. Applying the same, we find no reason to deny the coverage of the present appellant's activity to be under rule 173H since separate reprocessing of such material is not necessary. The present case has inappropriately been terms as replacement.
2.3 In view of the two member decisions of this Tribunal in J G Glass Ltd 1988 (37) ELT 248 and Hindustan Motors Ltd 1992 (62) ELT 66, he Single Member decision in a case of soap cake repairs by the Ld Commissioner was not called for as that decision had been arrived without considering these two member decisions.
2.4 When duty demands could not be made, there is no cause for penalty under rule 173Q.
3.1 In view of the findings above, the order is set aside and appeal allowed.