TMI Blog2003 (11) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... ective goods under Rule 173H of the Central Excise Rules, 1944 for repair/rectification; that after removing/rectifying the defects, the bulk drugs are sent back to the Customers without payment of duty after following the procedure prescribed for the purpose; that the Commissioner under the impugned Order No. 11/CE/JAL/2003, dated 4-3-2003, has confirmed the demand of duty and imposed penalty equal to the amount of duty holding that the impugned goods received from the buyers were rejected materials or meant for replacement and the process undertaken by them to make the goods fit for use amounts to manufacture as per Note 11 to Chapter 29 of the Schedule to the Central Excise Tariff Act. 3.1 The learned Consultant, further, submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain marketable to the consumer." 4.1 The learned Consultant mentioned that the Commissioner has travelled beyond the show cause notice for there is no allegation at all in regard to the marketability factor in the notice except a re-production of the said Note; that in any case the findings of goods being sent to other persons after removing the defects and value addition are not relevant for invoking Note 11 to Chapter 29; that the Note talks about the treatment to the product and not the commercial aspects. He relied upon the decision in Lakme Lever Ltd. v. CCE, Mumbai, 2001 (127) E.L.T. 790 (Tribunal) wherein it has been held that the process to fall within the meaning of "any other treatment" must be one which confers upon the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-following of procedure. He finally mentioned that as they had followed all the procedures as prescribed under Rule 173H, nothing has been concealed from the Department, no penalty and interest can be demanded from them. 5.Countering the arguments, Shri Kumar Santosh, learned SDR, reiterated the findings as contained by the impugned Order dated 4-3-2003 and emphasised that the Appellant had filed D-3 declarations under Rule 173H mentioning therein that the duty paid goods were received back for the purpose of "testing" only whereas their customer's letter dated 26-12-2000 makes it clear that the goods were not in good condition and cannot be used and were sent back for replacement; that thus the Appellants had misdeclared to the Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal No. E/329/2003-NBC, the learned Advocate submitted in addition that the entire demand of duty is time-barred as the period involved is 13-5-1997 to 10-7-1999 and the show cause notice has been issued on 12-3-2001 which is much beyond the normal period of limitation of one year specified in Section 11A(1) of the Central Excise Act; that the extended period of limitation is not invocable as nothing has been suppressed from the Department, for, there is a clear admission in the show cause notice that they "have been following the procedure as laid down under Rule ibid" (Rule 173H); that they have been filing the D-3 declarations regularly and the clearance of re-processed goods without payment of duty has been duly intimated through RT-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drying, milling, blending, testing by Quality Assurance, repacking, re-labelling and putting a new lot number and new expiry date; that product may be processed chemically also which means hydrolysis, crystallization. It has also been stated by Shri Negi that the product is considered as a fresh material as if manufactured and allotted fresh lot number. Bulk Drugs, manufactured by the Appellants fall under Chapter 29 of the Schedule to the Central Excise Tariff Act. Note 11 to this Chapter reads as under: "In relation to products of this Chapter, labelling or re-labelling of containers and repacking from bulk pack to retail packs or the adoption of any other treatment to render the product marketable to the consumer, shall amount to manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the case of Lakme Lever Ltd. is not applicable as the facts are entirely different. In the said matter, the Canteen Stores Department of India (CSD) which sells the goods manufactured by M/s. Lakme Lever Ltd., through its retail outlets to Members of Armed Forces, requested the Appellants to sort and pack the goods in the manner that would attract its customers. For example a carton of lipstick would be sold containing 12 lipsticks of one colour. In the case of CSD however, a carton contained 12 assorted colours of lipstick. In view of these facts, the Tribunal held that "if the products were already marketable any amount of treatment to enhance its marketability would not amount to manufacture within the meaning of this Note. That t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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