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2016 (4) TMI 792 - CALCUTTA HIGH COURT

2016 (4) TMI 792 - CALCUTTA HIGH COURT - 2016 (336) E.L.T. 289 (Cal.) - Revision under Section 35EE of the Central Excise Act - drugs exported by the petitioner in bulk quantities were exempted from duty and the petitioner ought not to have been paid any duty thereon to claim rebate thereof - whether clause (A) or clause (B) under the column of description of excisable goods pertaining to the relevant entry would be applicable in this case? - Held that:- If the goods exported by the petitioner w .....

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und, the payment of the excise duty at the time of exports in this case could have been regarded as a mistake with a subsequent application for undoing the same. However, as it appears, the payment of the duty was not made in cash, whereas the rebate is payable in cash. The payment was made by using the Cenvat credit built up by the petitioner; which becomes relevant and whether there may have been some mischief afoot, cannot be answered merely on the basis of the adjudication conducted in cours .....

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sible, the Court will refrain from interfering with the order. In the present case, the view taken by the appellate and the revisional authorities appear to be eminently justified on the basis of notification no. 4/2006 and there is no occasion for the petitioner to feel aggrieved thereby. - WP 6516 (W) of 2016 - Dated:- 12-4-2016 - Sanjib Banerjee, J. For the Petitioner : Mr. Ravi Raghavan Ms. Satabdi Chatterjee Mr. Tanmoy Chakravarty For the Respondent : Ms. Debjani Ray Mr. S. B. Saraf Mr. K. .....

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t credit enjoyed by the petitioner at the relevant time. The petitioner subsequently applied under Rule 18 of the Central Excise Rules, 2002 for rebate of the duty paid. At the lowest level, the petitioner succeeded. The department went up in appeal and the relevant Commissioner reversed the order on the ground that the drugs exported by the petitioner in bulk quantities were exempted from duty and the petitioner ought not to have been paid any duty thereon to claim rebate thereof. It is such or .....

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xemption or reduced rate of duty payable thereon; and, the condition attached to obtaining the benefit of reduced duty or exemption. There is no dispute that serial no.47 of the table under notification no.4/2006 is applicable in this case. However, there is considerable disagreement between the petitioner and the department whether clause (A) or clause (B) under the column of description of excisable goods pertaining to the relevant entry would be applicable in this case. It is necessary to ext .....

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Customs, dated the 1st March, 2002, (G.S.R. 118(E), dated the 1st March, 2002) (B) Bulk drugs used in the manufacture of the drugs or medicines at (A) above Nil Nil - 2 The petitioner contends that since the petitioner had a licence to manufacture bulk drugs and the petitioner only deals in bulk drugs, the goods exported by the petitioner were covered under the description of clause (B) pertaining to the relevant entry in the table. The petitioner says that since there was a condition attached t .....

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o the description under clause (A) pertaining to the relevant entry in the description column of notification 4/2006. The petitioner makes a distinction on the basis of definition of bulk drugs appearing in serial no.43 of the same table under the relevant notification. The petitioner says that a drug can be used directly as a medicine or for the purpose that it is meant; whereas a bulk drug may be a concentrate that requires dilution or mixing with some other compound for the purpose of its end .....

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levant orders insinuate an element of mischief on the part of the petitioner in needlessly availing of the Cenvat credit to subsequently seek to encash the same, almost by a subterfuge. The petitioner refers to a Gujarat judgment reported at 2014 (300) ELT 481 where a view was taken that notwithstanding Section 5A(1A) of the said Act, when duty had been paid at the time of export, the exporter was entitled to claim a rebate therefor under Rule 18 of the said Rules. However, the court did not con .....

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the time of export, merely because it is an export transaction, the first limb of Rule 18 would be otiose. The two limbs that Rule 18 of the said Rules straddles are the rebate on the duty that the exporter may have paid and the rebate on account of the duty that the exporter paid in purchasing the raw material going into the making of the finished product. The petitioner has also referred to a judgment reported at 2015 (324) ELT 686 where the Supreme Court considered the effect of the misleadi .....

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nally relied on a judgment reported at 2010 (260) ELT 3 where, again, a domestic transaction was involved and not an export transaction. There is an element of latitude that may be allowed to the petitioner if the petitioner can demonstrate that the goods exported by the petitioner were covered by clause (B) of the description in serial no.47 of notification 4/2006. As would be evident from the description of the two categories of goods under the relevant entry, all drugs specified in List 3 or .....

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rs covered by clause (A) of the same entry, subject to certificates being issued by the users thereof of such use. In other words, drugs which are already recognized in Lists 3 and 4 have to be regarded as completely exempted from payment of duty and such drugs, merely because they were sold in bulk quantifies, could not be regarded as bulk drugs attracting the description under clause (B) of the same entry. The expression Bulk drugs , in clause (B) under the column of description of goods in th .....

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uch pharmaceutical product is a bulk drug and is used in the manufacture of the drugs or medicines covered by clause (A), the same would be exempted from duty, subject to the condition that the procedure laid down in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 is followed. In the context of the expression as used in the relevant entry in the said notification, bulk drugs cannot be seen to be drugs covered by clause (A) of the .....

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eading of the above provisions, it is seen that a bulk drug can be used as such or as an ingredient in any formulation. Any bulk drug which features in List 3 or List 4 appended to Notification No. 21/2002-Cus dated 17.03.2002 will be exempted unconditionally. However, any other bulk drug if used further in manufacture of any drugs or medicines listed in List 3 or List 4 is exempted only subject to fulfillment of prescribed condition. There is no doubt that the drugs that the petitioner exported .....

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ect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods. If the goods exported by the petitioner were covered by the description under clause (A) of the relevant entry, such goods were absolutely exempted from any duty of excise leviable thereon. As a consequence, there was no occasion for the petitioner to pay any duty for removing the goods from the peti .....

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