TMI Blog2022 (10) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... / disposed off within the factory thereafter - HELD THAT:- There is no dispute in the facts that packaging /raw materials on which Appellant has claimed Cenvat credit has been used in process of manufacturing of medicaments for trial and testing purpose and quality purpose under the Drugs and Cosmetic Act, which was subsequently destroyed. On the basis of such testing /quality control process only the marketability of the product is ascertained. Accordingly, the raw materials/ packaging materials which is used in manufacturing and which goes for testing /quality process are indeed the inputs which are used in or in relation to manufacturing of final products. The nature of products manufactured by the Appellant is such that it is a must/ necessity that it needs testing and hence, the same forms an integral part of manufacture and without which it is not possible to manufacture the final products. Thus, the Appellant is entitled for credit on input and packaging materials used for testing products (Exhibit batches) - reliance can be placed in the case of THERMAX CULLIGAN WATER TECHNOLOGIES LTD VERSUS COMMISSIONER OF CENTRAL EXCISE [ 2013 (12) TMI 977 - CESTAT MUMBAI] where it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78 Kgs., a qty. of 539.404 was left unused in the factory premises and the same could not be used for the intended purpose. Further, it was noticed that, Appellant wrongly availed Cenvat Credit of Rs. 1,40,89,259/- on input and packing materials used in manufacturing of Exhibit Batches which were subsequently destroyed/disposed off within the factory premises. It was also noticed by the officers that appellant illicitly cleared medicaments under cover of non-returnable challans without payment of duty of Rs. 1,71,500/ and the same was accepted by Mr. Sanjeev Jha, Deputy General Manager (Account) of the Appellant in panchanama dtd. 15.11.2018 and his statement dtd. 30.11.2017 and 08.02.2019. Accordingly, a show cause notice was issued, which was adjudicated vide OIO dtd.31.07.2019. The Adjudicating authority confirmed the demand of Central Excise duty of (i) Rs. 18,60,102/- (ii) Rs, 1,71,500/- and disallowed the wrongly availed and utilized Cenvat Credit of Rs. 1,40,89,259/- and ordered to recover alongwith interest. Since the Appellant had already paid the said duty amount, the same were appropriated against the demand; penalty was imposed under Section 11AC of the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. As regard the second issue he submit that, in the instant case, the raw materials and packaging materials are used by the Appellant- manufacturer in the factory in manufacture of sample /exhibit batches . The process of manufacture of exhibit batches is one of the processes which ultimately lead to the manufacture of the final products which is cleared on payment duty. In other words, without undertaking testing/sampling/ manufacturing exhibit batches the appellants cannot proceed with the manufacture of final products. The Appellant are a pharmaceutical company producing pharmaceuticals /drugs. The nature of products manufactured by the appellant is such that it is a must/ necessity that it needs testing and hence, the same forms an integral part of manufacture and without which it is not possible to manufacture the final products. Without testing, the medicines ( approved final products ) cannot be put out in the market. Hence the raw materials/ packing materials ought to be treated as used in relation to the manufacture of the final products of the Appellants, be it directly or indirectly. In some industries, quality check is undertaken after manufacture of final pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No. 43/2001-CE (NT) for the clearance of the same without putting to use for manufacture of exported goods, demand of duty can be paid by utilizing cenvat credit. We find that the identical issue has been considered by the tribunal in the matter of Shree Rajasthan Syntex Ltd. (Supra) , Shree Rajasthan Texchem Ltd (Supra) and Ginger Clothing Pvt. Ltd. (Supra) and the payment of duty on the goods procured under Notification 43/2001-CE (NT) by utilization form cenvat credit for payment has been allowed. Therefore, following the said decisions we hold that the demand of duty can be paid by utilizing cenvat credit being no bar in law in this regard. 10. Second issue involved in the present case is that whether the Appellant is entitled to Cenvat Credit in respect of inputs and packing materials used in the manufacture of medicament (exhibit batches) and the same is tested for trial and quality purpose and were destroyed / disposed off within the factory thereafter. We find that there is no dispute in the facts that packaging /raw materials on which Appellant has claimed Cenvat credit has been used in process of manufacturing of medicaments for trial and testing purpose a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... destruction at that time assessment should be made for duty, if any, leviable as per law. In the present case, the Revenue has not adduced any evidence that the control samples have been removed from the factory and has not been consumed or lost or destroyed during the course of testing. In the absence of any corroborative evidence of removal of these samples from the factory, the demand of duty on such control samples cannot be sustained. The Hon ble High Court of Bombay in the case of Commissioner of Central Excise v. RPG Life Sciences Ltd. [2011 (264) E.L.T. 346 (Bom.)] has also held that : 4. In the present case, the specific case of the assessee is that samples drawn for testing were not cleared out of the factory but were cleared within the factory for testing and that the said samples were consumed in the process of testing. These facts have not been controverted by the revenue. It is not the case of the revenue that the assessee has failed to maintain the books/accounts as required under the Rules relating to the samples drawn for testing. Where the goods are not cleared out of the factory premises but were drawn for testing within the factory and in fact were con ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
