Karnataka High Court
Commissioner Of Central Excise vs Hicure Pharmaceuticals Pvt Ltd on 18 August, 2011
Bench: H.N.Nagamohan Das, K.Govindarajulu
IN THE HIGH COURT OF KARNATAKA
CIRCUIT BENCH AT DHARWAD
DATED THIS THE ism DAY or AUGUST,
PRESENT '.
THE HON'BLE MR. JUsT1cEy.G.sAi3HA1§11f1*~.j «
AND ' 9 "
THE HON'BLE MR. JUSTICSD i;,_MiAND~HiA.~xg _ ii
C.E.A. N¢i.13'@t[2ooa '
BETWEEN: 2
CowmnssmnumeoFfi£NTRALExefifi;
NO7l,CUflROAD,BEtGAUMf%mQOlA
. V' ~ ,_ _u_'; . APPELLANT
(BySn,MRUTHYUNJAYNTAENBANGLADVJ *='
AND: --w
inCUREPHARMAeEuncALsPvTtTD
l{AD_A.NVAli<;(f)P"P}';: git; BL; 55 1"2.gi_4i V
j "»3 {'_'gf _"" ".RESPONDENT
(Bysn.vwAyENDRAtnnMAKKNAvARADV.FOR
sRiF=xPATn;ADV3n'a
Thn;tn:A m fikkttyfiissd ofthe Centmfl Exdse ACL 1944
arisingout of 'Ordevr_<ilate'<,l 3'l~08--2007 passed in Final Order No.
lO25/'E2007, i3ra}."i1"igV that this Hon'ble Court may be pleased to:
__ I, T_<) deeidewhe substantial question of law stated
' ii at _th«ejrein.,
9' '<._ll1 ,Seti'a.si(le the CESTAT final order N0.lO25/2()O7
99 icla:it'ed.='31-082007 (Annexure--EI').
lilI~.i."The= findings at para 91, 9.2, 9.3, 9.5 85 9.7 of the
~.idKkT%n~0ngUwd N052/2005 damn 30/ll/2005
"passed by the Asst. Commissioner of Central
Excise, Hubli Division. Hubli to the extent of
demand of (:lt1t_\> on samples, interest and penalty
may be restored, in the interest ofjustiee.
This CEA, coming on for Final Hearing, this day,
.. __V_;iG.Sabhahit, J., delivered the l"ol1()wing:~
Iv
UDGMENT
This appeal is filed by the Revenue being a§;;gfit?ve.gli'nb{' rtllie i'
order passed by the Customs, Ext:ise'anc}4Seryit:e'TaX App.<§jll'at1e
Tribunal, South Zonal Bench, Bangal.ore_ [tor shot':_'CEZ"STAil""l,
in Appeal N().Excise/448/2006aclated tilted
appeal filed by the asseszsee has.-be:en,. al.lowecllset,tin.gl aside the
order passed by the COITlliY1'l'lS't5l(:)l_1(;'ii7 of Ce:ln.tral_ Excise (Appeals),
1 Ne;:%39"j/ Qpoe' c.l:a.ted.i';21:(32l.2006.
l\/langalore, in Appea
2. This z5iiPPC§a'ili:s adniittecl on 05:0-8v;'2009 to consider the
following SL1l)_Sl,'c'1i:_1_1il:»'l'(':1l ci"u.'<':sit'i*o'n i'te;l7l"la{nt;: 3
ail" Tribunal is correct in overriding
l of CBEC's Supplementary
__ _ iiiinslti'uc»tio'r_i»esl and observations of the Apex
AA 'ceurt-in the matter of ll/I/S /TC L//V//TED vs
A. iliCCE;"PA TNA (reported in 2003 (151) ELT 246
(SC)?
Whether the Tribunal is correct in allowing
ii i exception to samples cleared in--house even
when prescribed procedure in law is not
followed?
e) Whether the Tribunal is correct in holding that
the goods have not attained stage of
\C,'\,
\.
marketability merely because they arefnot
packed?
d) Whether the Tribunal is correct_..§i_:n.ll'pilac--i:ng¥'._.l"
reliance on the decisions of Tribunal.ybytakpingii
into consideration on'i'y""a'i'ew facts? '_ A
e) Whether the Tribunalis 'cloirectl'in_ app'l'yingl"the'T1.s_'
same ratio of ,,'rud_gments_ in" respectliofvsampleslt
cleared in--hou"sel"'*ifor tes-tingle "saniples
clearedtto outside ageneies? 1
3. The material fatrts neces;sar§""--l"<';.r'answering the above
said substantial qii_esti(;)ns--of_l'aw are as.'i'r)llo§\?'s.:--
The reVsl.p<)i1jd't;'i'it/assessee Arltii;'i1'i'g" the period from
January 2001, to Sfieptetnbei"»K_2OO'3ll has cleared certain products
manufaicttiredi Vtvhein _samples for in--house testing
purpose,"without,pa§'ine'n}l.Kit" duty. It was found that the
assessee herein_hasT'pro'dueed samples for in~house testing and
"sen"t:~--the':pi"o(luctslfllcleaiecl as samples to testing agencies
u_wir.;hout_Vp.ay*rneunt'..ol' duty and wrongly availed credit and also
pei'rnitted.leeVi't:¢iiii illegality' regarding the CENVAT Credit
V._availed*.V Fit show--Cause notice was issued as to why demand of
"«.i3s.33«i.488/--A for samples cleared for in--house testing and
Rls.6,226/A for samples Cleared for the testing agencies along
:9:
"17. ln the present case, the cigarette, which
is the end product of tobacco, is _yfit._f'foir*.._
consumption before the same is remo'v'e_fd.f_or»I'
test. Packing of the cigarette C8l'll'lO'iE'.l_.3"e = it
be incidental or ancillary to the"ma$nufactu'riVngy
process, but the same maylbez»inc.i'd'ental*-toruse.i
ancillary to its sale only;..ln'c.ase itgis; laid dov\{n*. V
that packing Vo'f._j'c~i.garett'e.__ is .uAin'cid"e_ntal'r 'or
ancillary to the _c_o'mpIe.t_ion of «mvanufactured
product's','_'th.e sa:meyAmay.res.ult into 'evasion of
excise duty ;_as 'before _pa-cVki.ng*.the cigarettes
t._he__same"'may': be regula'rly..:s=upplied to each
ai;$ad"_yey%eryi1_employee'x"'forV»': his consumption
_:."w_itho'ut.pay-m'e'i1tfiofffiegxcise duty thereon. The
Vx'«.i.'d.e1f:i;p.itio'ntof_V"ma-n.ufacture' under Section 2(f)
ci'early__ -includes process which is
'inciCl:eVnftal~._:fo'r.ancillary to the completion of
= mfa-nuAfact'u..red product. Manufacture of
'cigarette is completed when the same
emerges in the form of sticks of cigarettes
"-which are sent to the laboratory for quality
"control test. Sticks of cigarettes can be
consumed and manufacture of the end-
product, iet. cigarette, which is commercially
known in the market as such: is completed
before its removal for test and after testing only
packing of the same, which is the requirement
kit, &
:11:
General that though in the show cause notice
the appellant --Company was specifically
upon to show cause for non~mainten.an<ce:'elk:
account in relation to the sticks o.f4":ciga:rette'*i it".
sent for quality control test, but .i:'i'of'~that
it failed to produce an3,./i account"wha'tso_e'ver._to
show as to how muchg'uantityi»'ofg'.ciga.re'tt§~...iA;ii'A
sticks was sent'ifo'r-rgualiitiy. control'V:tes.t<durin.g
different periods,v'Vi'in_uch_ less'-.prodvucin'g any
account, i"r;..g_relat§to'n 'toritheadestruction'of the
cigarette sticks of testing. At
this stage'. Gahes.h".suVbiliVn'i'tted that the
niatter should Ve_i_ttier to the Tribunal
«ia_gs.sVe's_sir"ig7_authority for affording
'V"o;;§:p:.ortun_it3IgA'to appellant to produce the
"5.i'Vacco.unts_a«nd then record a finding as to how
.rnany.gciga'rette._. sticks were destroyed during
l Vvthe_co'Lirsegaof testing.
in vie{?x"«.<tl' the above said facts of the case and the
V11rif;<:ip'1esrlaid"down by the Hon'b1e Supreme Court in [TC's
Case,' it that the substantial questions of law have to be
ans"v+'er'--'¥d s . -
' Z L in favour of the Revenue and against the
In the result, we pass the following o1'<cier:A
Wt >2
ORDER
The appeal is allowed in part;
The order passed in is No.EXCISE/448/200€§hdated 3~i'.'o--8'I2~0'o'7:: « on the file of thefTcdafdmsfiiexeiae'«&l._;""
Service Tax Appellate:'--Tripuna'l;._AS'o.uth it Zonal Bench _ "Bangalore, allow_ing['th_.em appeal is set asidel' _ The /e=a.ld a'p"d'e'ai--I'j' isixdismissyeid by confirming ' ' the foirvder' by the .vAppellatevAtJvtho--rityfThe Coinimissioner 4"";1jcl'ao'r ".C€{ntl"al_.VE.$<civse.:A [ApPe8'3]i 1"wi'a..dda-ridge,"~~:n__ a'ppea!.V.No.59/2006 dated ;O2,._2'O_:O6,'xx./.h:oWin§ turn had confirmed "' Hihle% drj'g~m_ai _ order No.52/2005 dated . passed by the adjudicating it au4thority:'_--j:~Assistant Commissioner of it _ Central Excise, Hubli.
Sd/~ JUDGE Sd./-
FUDGE