2023 (5) TMI 189 - AT - Central Excise

Captive Consumption - sterile water for injection was captively consumed - benefit of N/N. 67/95-CE dated 16.03.1995 as amended by notification no. 16/2003-CE dated 01.03.2003 - HELD THAT:- In the show cause notice, the charge made by the revenue was the Sterile Water cleared in the combi pack along with “Rabipur vaccines” is classifiable under chapter heading no. CETH 28510010 as bulk drugs and the same was liable to duty - the vaccine cannot be administered without sterile water therefore the sterile water is also considered to be the vaccine which attracts only the nil rate of duty under CETH 3002.

From the Note 3, it is clear that when the goods are cleared in sets consisting of two or more separate constituents in that case if the product is included to be mixed whether to obtain a product of Section VI or Section VII are to be classified in the heading prior to that product. In the present case, after mixing of the vaccine powder with sterile water, it is clearly intended to be administered as vaccine therefore, entire combi pack shall be correctly classified under the Central Excise Tariff Heading No. 3002 which is meant for vaccine. The condition from (a) to (c) given in Note 3, is clearly satisfied in as much as all the constituents of combi pack are used altogether at the time of administering the vaccine to the human body. Being combi pack it is presented together and since the Rabipur vaccine powder cannot be used without mixing of sterile water, it is undoubtedly complementary to each other - Note 3 of Section VI there is absolutely no doubt that the sterile water cleared in a combi pack with vaccine and syringe will also fall under CETH 3002 which is a vaccine. When this be so, then the entire combi pack attracts nil rate of duty under CETH 3002. On this basis, the demand is not sustainable.

Even if it is assumed that the sterile water is used captively for manufacture of vaccine in such case also the sterile water is not liable to duty on the ground that from June 1998 till 24 February 2005, the distilled or conductivity water and water of similar purity used within the factory of production was attracting nil rate of duty and from 24th February 2005 to 30 December 2006, the said product was exempted under notification 3/2005-CE dated 24.02.2005 when used within the factory of production therefore even if the contention of the review order of the revenue is considered even then the product was not liable to duty.

Appeal allowed.