Custom, Excise & Service Tax Tribunal
Serum Institute Of India Ltd vs Commissioner Of Central Excise, ... on 7 August, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. C/749/08-Mum (Arising out of Order-in-Original No. 13/Adj/2008 dated 29.3.2008 passed by Commissioner of Central Excise & Customs, Pune-III) For approval and signature: Honble Mr. S.S. Kang, Vice President Honble Mr. P.K. Jain, Member (Technical) ======================================================
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 :
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?
====================================================== Serum Institute of India Ltd. Appellant Vs. Commissioner of Central Excise, Pune-III Respondent Appearance: Ms. Padmavati Palil, Advocate, for appellant Shri Ahibaran, Additional Commissioner (AR), for respondent CORAM: Honble Mr. S.S. Kang, Vice President Honble Mr. P.K. Jain, Member (Technical) Date of Hearing: 7.8.2014 Date of Decision: 7.8.2014 ORDER NO Per: S.S. Kang Heard both sides.
2. The appellant filed this appeal against the impugned order passed by the Commissioner of Central Excise, Pune, whereby a demand of Rs.44,24,726/- is confirmed with interest and penalties are also imposed. The adjudicating authority also held that the goods in question are liable for confiscation and gave option to redeem the same on payment of redemption fine.
3. The brief facts of the case are that the appellants are a 100% EOU engaged in the manufacture of vaccine (human medicine) falling under Chapter Heading 30.02 of the Central Excise Tariff. The appellants were importing raw material without payment of duty by availing the benefit of Notification No.126/94-Cus. dated 3.6.1994 and Notification No.52/2003-Cus. dated 31.3.2003.
4. The Revenue on scrutiny of the records of the appellant, found that some quantity of the inputs received without payment of duty were used in their research and development activities. The show cause notice was issued for denying the benefit of the above mentioned Notifications on the ground that the raw material is not used for the manufacture of final product. The adjudicating authority passed the impugned order.
5. The contention of the appellant is that the appellants are manufacturing vaccines and for the manufacture of vaccines, a regular research and development is required. In these circumstances, the same inputs which were received without payment of duty, which are required for the manufacture of export goods are consumed to carry out the research and development for the improvement of products. Without the research and development, the manufacturing process cannot be undertaken and completed properly. The appellants relied upon the decision of the Tribunal in the case of CCE, Hyderabad vs. Dr. Reddy Laboratories Ltd. reported in 2010 (253) ELT 316. The contention is that the Tribunal in a similar situation upheld the order passed by the lower authority whereby the confirmed demand on the same ground is set aside.
6. The Revenue relied upon the findings of the lower authority and submitted that as the raw material received without payment of duty is not used for the manufacture of final product hence the appellants are not entitled for the benefit of the Notifications.
7. We find that in the present case the appellants being a 100% EOU made import of certain raw material without payment of duty by availing the benefit of the above mentioned Notifications. Part of the raw material is used for research and development activity which is essential for manufacture of human vaccines. The Tribunal in the case of Dr. Reddy Laboratories Ltd. (supra) rejected the contention of the Revenue that the manufacturer is liable to pay duty in respect of the raw material obtained without payment of duty, which is used for research and development purposes. In the present case, we find that there is no allegation that the raw material which is procured without payment of duty is diverted or not used within the 100% EOU as the research and development facility is within the 100% EOU. In these circumstances and in view of the above decision of the Tribunal, we find merit in the contention of the appellant. The impugned order is set aside and the appeal is allowed.
(Dictated in Court) (P.K. Jain) Member (Technical) (S.S. Kang) Vice President tvu 1 4