Custom, Excise & Service Tax Tribunal
Coms,C.Ex - Guwahati vs M/S. Hi-Tech Medical & Surgical ... on 4 August, 2023
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Excise Appeal No. 928 of 2011
(Arising out of the Order-in-Appeal No. 48/GHY/CE(A)/GHY/11 dated
12.08.2011 passed by Commissioner of Customs & Central Excise, (Appeals),
Guwahati.)
Commissioner of Central Excise, Guwahati,
Sethi Trust Building, Bhangagarh, Guwahati-781005.
...Appellant (s)
VERSUS
M/s Hi-Tec Medical &Surgical Products,
A-2 & A-9, Mini Industrial Estate, Gopinath Nagar, Kalapahar, Guwahati-781016.
. ...Respondent(s)
APPERANCE :
Shri K. Chowdhury, Authorized Representative for the Appellant None, for the Respondent CORAM:
HON'BLE MR. ASHOK JINDAL MEMBER (JUDICIAL) HON'BLE MR. K. ANPAZHAKAN MEMBER (TECHNICAL) FINAL ORDER No...76377/2023 DATE OF HEARING : 04.08.2023 DATE OF DECISION : 04.08.2023 PER K. ANPAZHAKAN :
The Respondent is engaged in the manufacture of disposable syringes. They submitted an application dated 08.01.07 claiming exemption from the payment of the Central Excise duty in terms of Notification No. 32/99-CE dated 08.07.99 on the ground that it is a new industrial unit set up after 24.12.97. The Respondent was granted license from the drugs Controller, Govt. of Assam on 01.09.03. They have obtained Central excise registration for the manufacture of disposable injection syringe (with or without needle).
2. The process of manufacture of the disposable syringes as described by the Respondent in their application is that they receive the components of disposable syringes and needles in the factory, from the supplier. These are taken to the packing section after quality-control check where the syringes are 2 Excise Appeal No. 928 of 2011 packed in ribbon-packing machine into pouches with laminated film and paper and LDPE film; these are together put in inner boxes; which are put in master cartons; and later in the sterilizing machines these are sterilized with ethylene-oxide gas; after sterilization, the boxes are placed in quarantine area and are dispatched, as per order.
3. A Show Cause Notice dated 18.06.09 was issued to the Respondent asking them as to why the manufacturing processes carried out in their factory should not be deemed as 'minor processes' as per para 5 of the notification No.32/99- CE dated 08.07.1999 as amended, and consequently why they should not be held as ineligible for the exemption provided under the said Notification. The Notice was adjudicated vide Order-in-Original dated 07.01.10 wherein the adjudicating authority rejected the Respondent's claim of eligibility under the notification No. 32/99-CE dated 08.07.1999 as amended and the refund claims submitted by them there under, were also accordingly rejected. On appeal, the Commissioner (Appeals), Guwahati, set aside the O-i-O dated 07.01.2010 and allowed the appeal filed by the Respondent with consequential relief. Aggrieved against the impugned order, the department has preferred this appeal.
4. The Respondent contended that they are performing the following manufacturing processes:-
(a) Assembling of components of syringe.
(b) Checking and testing in Quality Control Lab, and
(c) Performing duties and responsibilities of manufacturing and analytical chemist as per IS: 10654-2002, IS:10258-2002 and 10150-1981 norms.
5. The Respondents further submitted that they are undertaking processes which amount to manufacture in terms of Section 2(f) of the Central Excise Act, 1944 where disposable syringes emerge as final product in the course of the process. They receive inputs under proper invoices and proper accounting 3 Excise Appeal No. 928 of 2011 is done; that the situations under which exemption under the said Notification applies are specified in clause 5 of the said notification itself. It does not mention the word "minor processes". They cited the copy of invoice Nos. TI- 86 dated 13.12.08 issued by supplier, M/s. Hi-Tech Hospital & Healthcare Corporation Ltd., Gorakhpur, wherein the goods are described as "parts of syringe with needles, in sets". The Lower Authority has reasoned that the final product is also syringe fitted with needle; the 'assembling' is done by hand and no new product emerges out of the process, as the description of the goods and their classification before and after assembly, remains the same. Thus, the impugned order concluded that manual 'assembling' cannot be treated as a manufacturing process. In this regard, the Respondent submitted that the finished goods comes into existence only after the process of 'assembling' of the parts undertaken by them. Also, packing is done with the help of machines, which makes the goods marketable. Sterilization is also necessary to make the goods marketable, but in the impugned order, it has been observed that it is nothing but a cleaning operation specified in para 5 of the notification No. 32/99-CE dated 08.07.1999 as amended. Hence, the activities performed by the Respondent can at the best be described as "packing and cleaning operation" and the final product does not undergo any other process or processes. Accordingly, the Lower Authority rejected the Respondent's claim of eligibility under the notification No. 32/99-CE dated 08.07.1999 as amended; and the refund claims submitted by them there under, were also rejected vide the impugned Order-in-Original dated 07.01.10. However, the Appellate authority has accepted their submissions and set aside the Order-in-Original. Accordingly, they prayed for dismissing the appeal filed by the department.
6. The Ld. A.R. submitted that a simple and plain reading of the manufacturing process submitted by the Respondents makes it amply clear 4 Excise Appeal No. 928 of 2011 that they are essentially performing the activities of 'packing and repacking' of the raw materials/various components of syringe primarily into unit pack which are further packed into secondary packs to render themselves marketable which is followed by the process of sterilization which can simply be categorized as the process of 'cleaning' as described in para 5 of the notification No 32/99-CE dated 08.07.1999 as amended. They are not saying that the process does not amount to manufacture. The contention of the department is that the activities undertaken by them falls within the exclusion clause as provided in para 5 of the said Notification. Accordingly, they contended the impugned order is liable to be set aside.
7. Heard both sides and perused the appeal records.
8. We observe that the question to be decided here is whether the activity under taken by the Respondent fits into the description of processes specified in paragraph 5 of the notification No. 32/99-CE dated 08.07.1999 as amended. For the sake of ready reference, the said para is reproduced below:-
"5. The exemption contained in this notification shall not apply to such goods which have been subjected to only one or more of the following processes, namely, preservation during storage, cleaning operations, packing or repacking of such goods in a unit container or labeling or re-labeling of containers, sorting, declaration or alteration of retail sale price and have not been subjected to any other process or processes amounting to manufacture in the States of Assam or Tripura or Meghalaya or Mizoram or Manipur or Nagaland or Arunachal Pradesh or Sikkim".
9. We find that the Respondent has described their manufacturing process in detail that they receive the components of syringe, viz., barrel, plunger (made of polypropylene), gasket (made of PVC compound), and disposable needles (i.e. components of needles-cap, hub and cannula) as raw materials. These raw materials are then assembled in a controlled aseptic atmosphere. After 5 Excise Appeal No. 928 of 2011 assembling, the syringe materials and the packaging materials are sent to the quality control laboratory for inspection and testing, as per the IS norms. The checked materials then are made to pass through a pass box in a clean room (packing section for packing by ribbon packing machine with laminated film and paper tape. The pouch-packed syringes are kept in inner boxes and then inner boxes are kept in a master carton for sterilization. Master carton is then sterilized with Ethylene Oxide gas for six hours by maintaining chamber temperature at 50-55* (degree) C and pressure of 0.6 kg/Cm2. After this is completed, the sterilized goods are kept in quarantine area. To ensure satisfactory sterilization, randomly collected samples undergo a sterility test. The goods are then considered ready for sale. We observe that these processes are not simple 'cleaning' process specified in Para 5 of the Notification.
10. We observe that the original adjudicating authority has erred by considering that the sterilization process carried out on the assembled disposable syringes is only an ancillary process performed by the Respondent to make the impugned goods marketable. It was held to be a cleaning operation, and as per Para 5 of the notification No. 32/99-CE dated 08.07.1999 as amended, they are not entitled to get the benefit of the said exemption notification.
11. We observe that the Lower Authority has erred by equating the procedures "assembling" with "packing and cleaning operations". The Respondents have carried out the process of "assembling" of the inputs in order to manufacture their final product "viz disposable syringes". The activity of 'Assembling' of various parts of a syringe with needle amounts to "manufacture" in terms of Central Excise Act, 1944. This is not disputed by the department also. These processes were not specifically excluded in para 5 of the Notification No. 32/99-CE dated 08.07.1999. Accordingly, we hold that para 5 of the 6 Excise Appeal No. 928 of 2011 notification No. 32/99-CE dated 08.07.1999 as amended is not applicable in the instant case. Thus, we hold that the adjudicating authority, who passed the Order-in-Original has erred in rejecting the refund claims submitted by the Respondent in terms of the notification No. 32/99-CE dated 08.07.1999 as amended.
12. We observe that the Ld. Commissioner (Appeals) placed his reliance on the judgment delivered by the Hon'ble Supreme Court in the case Union of India Vs. DCGM Co. Ltd., [1997 (1) ELT (J19)(S.C.)], which is squarely applicable in this case. We observe that the department has agreed that the process undertaken by the Respondent amounting to manufacture and it was never in dispute. In our view, the processes involved therein were not mere cleaning operations, so as to exclude the same from the benefit of the area based exemption vide para 5 the notification No. 32/99-CE dated 08.07.1999 as amended. Accordingly, we hold that the impugned order passed by the Commissioner (Appeals) is legally tenable.
12. In view of the above discussion, we dismiss the department appeal filed by the department and uphold the impugned order passed by the commissioner (Appeals), with consequential relief, if any, as per law.
(Dictated and pronounced in the open Court) Sd/-
(Ashok Jindal) Member (Judicial) Sd/-
(K. Anpazhakan) Member (Technical) Tushar