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Serum Institute of India Ltd Vs. Commissioner of Central Excise, Pune-III [2014-TIOL-1887-CESTA T-MUM]

Serum Institute of India Ltd. (“the Assessee”) is 100% EOU engaged in the manufacture of vaccine (human medicine) falling under Chapter Heading 30.02 of the Central Excise Tariff Act, 1985. The Assessee imported raw material without payment of duty (inputs) by availing the benefit of the Notification No. 126/94-Customs dated June 3,1994 and the Notification  No. 52/2003-Customs  dated March 31, 2003 (the Notifications)

The Revenue on scrutiny of records found that some quantity of the inputs were used in the research and development activities of the Assessee and not used in manufacturing of final product. Therefore, Show Cause Notice was issued denying the benefit of the Notifications, which was further upheld by the Commissioner of Central Excise, Pune confirming demand of Rs. 44,24,726/- along with interest and also penalties. Further, the goods in question were confiscated and an option to redeem the same on payment of redemption fine was provided. Being aggrieved, the Assessee filed an appeal before the Hon’ble CESTAT, Mumbai.

The Assessee contended that they  are manufacturing vaccines and for further improvement, a regular research  and development is     essential.  Without   the research        and        development,       the manufacturing      process     cannot        be undertaken and completed properly. The Assessee further relied upon the decision of Hon’ble Bangalore Tribunal in case of CCE, Hyderabad Vs. Dr. Reddy Laboratories Ltd. [2010 (253) ELT 316] (“Reddy Laboratories case”).

The Hon’ble Tribunal also relying upon the Reddy Laboratories case set aside the confirmed demand and allowed the Appeal.

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email:

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June 2024