Custom, Excise & Service Tax Tribunal
Glaxosmithkline Pharmaceuticals Ltd vs Commissioner Of Central Excise, ... on 22 January, 2018
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/172/09 (Arising out of Order-in-Original No. 11/SHH/2008-2009 dt. 20.11.2008 passed by the Commissioner of Central Excise, Mumbai-III ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) Honble Shri Raju, 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 : No
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?
=======================================================
GlaxoSmithKline Pharmaceuticals Ltd.
:
Appellant
VS
Commissioner of Central Excise, Mumbai-III
:
Respondent
Appearance
Shri Mr. Anay Banhatti Advocate with
Ms. Virangana Wadhawan, Advocate for Appellant
Shri A.B. Kulgod, Asstt.Commr. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri Raju, Member (Technical)
Date of hearing : 22/01/2018
Date of pronouncement : 28/02/2018
ORDER NO.
Per : Raju
The appellant are in appeal against the confirmation of demand of Central Excise duty, interest and imposition of penalty under Section 11AC read with Rule 25(1) of the Central Excise Rules, 2004.
2. Ld. Counsel for the appellant pointed out that they are engaged in the manufacture of bulk drugs. During the process of manufacture of bulk drugs they used Palladium Charcoal Catalyst which is imported from UK. During the process of manufacture the said catalyst facilitates the Reaction. Over the period of use the said catalyst looses its effectiveness/potency and has to be replaced periodically. Palladium the precious metal which is used to manufacture this catalyst. The spent catalyst is cleared by the appellant by way of sale. A demand of duty on the said clearances for the period November 2003 to January 2007 was raised. The duty was demanded holding that the spent catalyst is classifiable under Heading 2620.00 of the Central Excise Tariff Act, 1985 and chargeable to tax at the rate of 16% Adv.
2.1. The Ld. Counsel further pointed out that earlier they were paying excise duty on the said clearances however after the decision of Honble Apex Court in the case of Commissioner Vs. Astra IDL 2003 (157) E.L.T. A91 (S.C.), they stopped the payment of excise duty on the said spent catalyst. He pointed out that Revenue had alleged that the decision in the case of Astra IDL (supra) is not applicable as in the said case the benefit was granted on the ground that Revenue has failed to establish that the spent palliadium catalyst is a marketable commodity. To buttress Revenue claim that spent palliadium catalyst is a marketable commodity they relied on the sales made by the appellant to M/s. Hindustan Platinum Pvt. Ltd., Navi Mumbai, and M/s. Arora Mathey Ltd., Calcutta. According to Revenue it was established the marketability aspect of the product.
2.2. Ld. Counsel argued that the issue is now settled in favour of the appellants by the decision of Tribunal in the case of Kusum Products Vs. Collector of Central Excise, Calcutta 1988 (33) E.L.T. 639 (Tribunal) which has been upheld by Honble Apex Court as reported 1995 (78) E.L.T. A217 (S.C.) he also relied on the following decisions:
(i) Collector of Central Excise Vs. Mehta Vegetable Products 1997 (93) ELT 229
(ii) Markfed Vanaspati & Allied Industries Vs. Commissioner of Central Excise 2000 (116) ELT 204
(iii) Nirma Ltd. Vs. Commissioner of Central Excise 2004 (171) ELT 238
(iv) Commissioner of Central Excise Vs. Deepak Fertilizers & Petrochem Corporation 2004 (178) ELT 686.
2.3. Ld. Counsel argued that catalyst cannot be considered as raw material used in the process of manufacture as it does not form part of the end-product. He thus argued that catalyst cannot be said to emerge as a result of manufacture. In this regard he relied on the following decisions:
(i) Commissioner of Central Excise Vs. I..G. Petrochemical 2015 (324) ELT 21 (S.C.)
(ii) Commissioner of Central Excise Vs. Deepak Fertilizers Ltd. & Petrochem Corporation2004 (178) ELT 686
(iii) Rashtriya Chemicals & Fertilizers Ltd. Vs. Collector of Central Excise 1989 (42) ELT 284 (Tribunal)
(iv) Amrit Vanaspati Co. Vs. Collector of Central Excise, Meerut 1988 (35) ELT 479 (Tribunal).
2.4. Ld. Counsel also relied on Chapter Note 3(a) to the Chapter 26 of the Central Excise Tariff Act which reads as follows:
Heading 2620 applies only to :
(a) Ash and residues of a kind used in industry either for the extract of metals or as a basis for the manufacture of chemical compounded metals, excluding ash and residues from the incineration of multipal waste (heading 2621); and
(b) Ash and residues containing arsenic, whether or not containing metals, of a kind used either for the extraction of arsenic or metals of the manufacture of their chemical compounds.
2.5. Ld. Counsel also relied on the Chapter Note 1.(f) of Chapter 26 which reads as follows:
1. This Chapter does not cover :
(a)..........
(b)...........
(c)............
(d)............
(e).............
(f) waste or scrap of precious metal or of metal clad with precious metal; other waste or scrap containing precious metal or precious metal compounds, of a kind used principally for the recovery of precious metal (heading 7112); or
(g)..............
On the above grounds Ld. Counsel pointed out that Spent Palladium Catalyst cannot be classified under Chapter 26 as alleged in the show cause notice. Ld. Counsel further relied on the Chapter Heading 3815 under which the Palladium Catalyst is classified. The Ld. Counsel argued that HSN Notes of the said heading clearly prescribed that-
This heading does not include:
(a) Spent catalysts of a kind used for the extraction of base metals or for the manufacture of chemical compounds of base metals (heading 26.20) and spent catalysts of a kind used principally for the recovery of precious metal (heading 71.12) 2.6. Ld. Counsel further argued that show cause does not disclose under which heading revenue seeks to classify spent catalysts. The show cause notice however notes that earlier the appellant had classified the said product under heading 2620.00. The show cause notice also notices that during the disputed period the appellant had shows the product description spent catalysts under Heading 2620.00 in the ER.1 returns although the quantity manufactured and cleared was shown as nil.
3. Ld. AR relied on the impugned order.
4. We have gone through the rival submissions. Ld. Counsel for the appellant has relied on the decision of Tribunal in the case of Astra IDL (supra) which was affirmed by Honble Apex Court. It is seen that the said decision of Tribunal was given on following grounds:
5.We find that? the issue involved herein has been properly analysed by the Commissioner as per para 9 of the impugned order dated 28-8-97. The relevant para is as under -
Para 9 - The short point for consideration is whether M/s. AIL have to pay Central Excise duty or reverse Modvat credit on the spent palladium. The submission of the assessee is that the spent palladium is not goods in terms of Section 2(d) of the CEA, 1944. I have considered the submission of the assessee. It is seen from the records that the Department has not come up with an acceptable evidence as to the classification of spent palladium. In the case of Mehta Vegetables Products v. CCE reported in [1997 (93) E.L.T. 229 (T)], the Honble Tribunal has held that Spent Earth and Spent Nickel catalyst emerging as residue do not arise out of manufacture and are not excisable goods in terms of Sec. 2(d), 2(f) and 3 of CEA, 1944. Since the investigation itself has not brought the spent palladium under any of the Chapter headings, I am afraid duty cannot be demanded on the same. Since the issue involved herein has been properly analysed by the Commissioner as can be seen above, we do not find any substance in the appeal filed by the Revenue. In the result, these two appeals are dismissed accordingly.
Honble Apex Court upheld the order of Tribunal on the following ground:
Delay condoned.
Application for substituting the name of the respondent is allowed.
Heard the learned counsel for the parties at length.
In our view, the order passed by the Tribunal does not call for any interference as the Department has failed to establish that spent palladium catalyst is a marketable commodity. Hence, these appeals are dismissed. Revenue has asserted that the said decision is not applicable in the instant case as the marketability of the said product is established in as much as the appellants are selling spent catalysts to two parties.
5. The appellant have also relied on the decision of Tribunal in the case of Kusum Products Vs. Collector of Central Excise 1988 (33) ELT 639 (Tribunal) in the said decision Tribunal had observed as follows:
4. The issue for decision in this appeal is excisability of spent nickel catalyst. Our attention is invited to Order No. 48/87-C, dated 9-1-1987, C.C.E., Patna v. Fertilizer Corporation, Order No. 322/87-C, dated 30-4-1987 Fertilizer Corporation of India v. C.C.E., Patna [1987 (30) E.L.T. 289] and Order No. 338-39/87-C, FCI v. C.C.E., Patna [1987 (30) E.L.T. 507], where spent nickel catalyst is held not to be manufactured and the same not excisable. There would appear no reason in this appeal to differ from those decisions. While Smt. Chander reiterated the grounds urged by the Revenue when the Tribunal took the aforesaid decisions, there is no reason why we should not follow those decisions. Following the same we allow the present appeal. In view of the above we have not deemed it necessary to consider the other points urged by the appellants in the written submissions like show cause notice being barred by limitation and other pleas. The said decision of Tribunal was upheld by Honble Supreme Court as reported 1995 (78) ELT A217.
6. Ld. Counsel had also relied on the decision of Tribunal in the case of Nirma Ltd. 2004 (171) ELT 238. In the said decision following has been observed:
(b) The question therefore would arise whether Capital Goods which loose their utility and result in waste or otherwise to be disposed off, would result in manufacture of exigible goods when they are marketable. Examining this aspect it is found :
(i)......
(ii)
(iii)
(c) Once no manufacture takes place, the levy under Section 3 is not attracted, the question of classification does not arise, therefore no findings are arrived at on the classification of the entity under dispute.
(d)..
From the above, it is apparent that it has been consistent view of Honble Apex Court that spent catalysts cannot be considered to be a result of manufacturing process and thus there cannot be any liability under Central Excise on spent catalysts. In view of above the appeal allowed.
(Pronounced in court on 28/02/2018)
(Ramesh Nair)
Member (Judicial)
(Raju)
Member (Technical)
SM.
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E/172/09