TMI Blog2005 (7) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 2. The relevant portion of the Apex Court Order remanding the case back to the Tribunal is reproduced below :- From the various affidavits, which are on record, it appears that during manufacture of Ethambutol Hydrochloride I.P. the two substances DL-2 Aminbutanol and Tartaric Acid have to be mixed together. As stated above two intermediate products came into existence one of which is L-2 ABT. As per the affidavits, in layman s language, L-2 ABT is nothing else but contaminated Tartaric Acid. As per the affidavits, it is unusable without a process of recovery. Thus, as per the affidavits, there is only recovery of the Tartaric Acid which was the original imported product. If this be the position then Tartaric Acid is merely being recovered for further use then there is no manufacture.................. .. ....................., learned Attorney General has invited our attention to two statements made by Directors of the 1st respondent which shows that apart from recovery of Tartaric Acid (for and on behalf of Respondent Nos. 3 and 5) the 1st respondent is also selling Tartaric Acid, recovered from L-2 ABT, on its own account. If that be so, then duty is payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain sent to M/s. Yash Pharma for manufacturing tartaric acid. Tartaric acid so obtained cannot be considered as if imported. It is required to be ascertained how much quantity of tartaric acid was obtained which was not imported. For this purpose also the case should be remanded to adjudicating authority. (4) Facility under Rule 57F(2) was not available to M/s. Themis and M/s. Lupin. No Modvat credit was taken of duty paid on tartaric acid as CVD and nor it was admissible to them as the final products were exempt from duty. In fact, no Modvat credit was taken on tartaric acid imported by them. As per Rule 57F(2), inputs or partially processed inputs could be removed without payment of duty for manufacture of intermediate products to be used in final products. As no credit of duty was taken, they were not entitled to follow Rule 57F(2). This procedure has been followed merely to evade duty on tartaric acid manufactured by M/s. Yash Pharma, and therefore this is a clear case of suppression of facts, wilful misstatement and contravention of rules with an intention to evade appropriate duty. (5) M/s. Yash Pharma has also manufactured tartaric from the L-2 ABT which has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read : for cash or deferred payment or other valuable consideration. (5) Secondly, it was submitted that if this interpretation is accepted, it would render the judgment of the Hon ble Supreme Court nugatory inasmuch as it would equate the sale with job work though the Hon ble Supreme Court distinguished between sale and job work and directed the Tribunal to levy excise duty on sale and not on job work. (6) It is submitted that the Annexure B and C to the Notice to show cause seeks to demand duty on the Tartaric Acid manufactured from L-2 ABT supplied by Themis and Lupin respectively and Annexure D specifically says Manufacture on their own behalf claiming SSI exemption under Notification No. 175 of 1986, dated 1-3-1986. Annexure B , C and D makes very clear that the transaction of sale are only those mentioned in Annexure D , whereas transactions mentioned in Annexure B and C are that of job work. (7) This is further evident from the fact that the notice to show cause sought to deny the facility under Rule 57F(2) essentially on the ground that the Tartaric Acid recovered by Yash Pharma from L-2 ABT on behalf of Themis and Lupin is used in the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, no duty was payable. (15) It is submitted that Yash Pharma is entitled to benefit of Notification No. 175 of 1986 for sale of Tartaric Acid sold on its own account (demand made in Annexure D to notice to show cause). The clearances mentioned in Annexure D are transaction of sale of Tartaric Acid out of L-2 ABT supplied by Themis and/or Lupin. These clearances are exempt under Notification No. 175 of 1986 and therefore no duty is payable thereon. (16) Without prejudice to the submission that findings recorded by the then Collector of Central Excise in the impugned order is correct and proper, the benefit of Notification No. 175 of 1986 cannot be denied in view of the following submissions. (17) The benefit of Notification No. 175 of 1986 is sought to be denied on the ground that Yash Pharma and Yash Pharma Laboratories P. Limited are having mutual interest in each other and are owned, managed and controlled by the very same persons with common machinery, finance, employees and facilities. (18) It is submitted that benefit of Notification No. 175 of 1986 can not be denied in view of Circular No. 6/92, dated 29-5-1992 (Annexure H ) issued by CBEC in exercise of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited company which is a manufacturer will be entitled to separate exemption limit. By applying the above provisions the production of M/s. Supreme Washers (P) Ltd. has to be considered separately for the purpose of exemption limit. We clarify the above position and dispose of the appeals. We, therefore, hold that the production of Supreme Washers (P) Ltd. cannot be clubbed with the production of LD Industries and LR Industries for the purpose of assessment. (22) The combined reading of the judgment of the Hon ble Supreme Court of India and the Order of this Hon ble Appellate Tribunal referred above, makes it very clear that Yash Pharma and Yash Pharma Laboratories Private Limited being Private Limited Companies, the production of each of the units cannot be clubbed with the other and Yash Pharma is entitled to separate exemption limit under Notification 175/86. (23) Without prejudice to the aforesaid, the demand being made from Yash Pharma itself shows that Yash Pharma is separate entity and in view of the judgment of the Hon ble Supreme Court of India in the case of Gajanan Fabrics reported in 1997 (92) E.L.T. 451 (Annexure K ) no demand can be made against Yash Pharma. (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable to the Department. 6. It is clear from the Apex Court s directions that the Tribunal has to come to a finding whether the recovery of Tartaric acid from L-2 ABT has been done on job work basis or there are transactions of sale between Lupin and Themis on the one hand and Yash Pharma on the other, and secondly whether Yash Pharma has sold Tartaric acid on its own account. Normally for determining dutiability of goods under the excise law, the criteria for satisfaction of the test of manufacture as laid down under various earlier decisions of the Apex Court provide a guidance. However, in the present case the Apex Court has itself directed the Tribunal to examine dutiability with reference to existence of sale and recovery on job work basis. There is, therefore, no scope for us to go into the question of manufacture in all its aspects. In any case, this question has been dealt earlier in the order-in-original and order-in-appeal by the Commissioner and the Tribunal respectively. 7. It has been contended by the Department that the transactions between Lupin and Themis and Yash Pharma in the context of sending L-2 ABT and receiving back recovered Tartaric acid should be consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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