Case Law Details
ALKEM Laboratories Limited Vs. Commissioner of Central Excise & ST, Daman (CESTAT Ahmedabad)
The assessee is entitled to avail Cenvat Credit in respect of inputs and packaging material used in manufacturing of trial batches of medicament.
The department denied cenvat credit in respect of inputs and packing material used in the manufacture of trial/ exhibit batch of medicament on the ground that the same are not used in the manufacture of excisable goods on which central excise duty is paid. The Tribunal observed that the trial/ exhibit batch of medicament is used to comply with the Drugs and Cosmetics Act, which was subsequently destroyed. On the basis of such tests, the marketability of the product is ascertained.
Accordingly, the Tribunal held that the process of testing of the medicaments is an integral part which is used in relation to manufacturer of the final product and the appellant is eligible to avail cenvat credit of inputs and packaging materials used in manufacturing such trial/ exhibit batches. The Tribunal set aside the impugned order and allowed the appeal. It may assist similarly placed litigants.
FULL TEXT OF THE JUDGMENT/ORDER OF THE CESTAT, AHEMDABAD
The issue involved in the present case is that whether the appellant is entitled to Cenvat credit in respect of inputs and packing material used in the manufacture of medicament and the same is tested for trial and quality purpose and were destroyed thereafter.
2. Shri Mahesh Raichandani learned Counsel appearing on behalf of the appellant submits that the testing of medicaments is a mandatory requirement under Drugs and Cosmetics Act. Such quality tests and trials were undertaken to ascertain level of quality for sale for human consumption. Therefore, the process of quality testing is an integral part of manufacturing of final product used in the manufacture of medicament which is used for testing purpose, is admissible for Cenvat credit. He placed reliance on the following judgments:-
(a) 2010 (2256) ELT 56 (BOM) – Tata Engineering and Locomotives Co. Limited vs. CCE, Pune
(a) 2018 (363) ELT 1104 – Tetra Pak India Pvt Ltd. Vs. CCE, Pune
(b) 2010 (262) ELT 974 – Sudarshan Chemicals Inds Ltd vs. CCE, Pune
(a) 2019 (20) GSTL 39 (Mad.) Ganesan Builders Ltd. vs. Commissioner of Service Tax, Chennai
(b) 2017 (3) GSTL 176 (Tri. – Mumbai) Thyssenkrupp Electrical Steel (I) P. Ltd. vs. CCE, Nashik
(e) 2018 (363) ELT 1107 (Tri. – Mumbai) – Bombay Dyeing and Manufacturing Limited vs. CCE (A) Raigad.
3. Shri Ghanshyam Soni, learned Joint Commissioner (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. He relied upon the judgment of Hon’ble Madras High Court in the case of CCE Madras vs. Union Carbide India Limited – 2001 (129) ELT 40 (Mad.).
4. I have considered the submissions made by both the sides and perused the record. I find that there is no dispute in the fact that
packaging/ raw materials on which the appellant has claimed Cenvat credit has been used in the process of manufacturing of medicaments for trial and testing purpose under the Drugs and Cosmetics Act, which was subsequently destroyed. On the basis of such tests only the marketability of the product is ascertained. Accordingly, the process of testing of the medicaments is an integral part which is used in relation to manufacturer of the final product. Accordingly, the raw/ packaging material which is used in manufacturing and which goes for testing are indeed the inputs which are used in or in relation of manufacturing of final products. I find that the judgments cited by the appellant supports their case.
5. As regards the judgment relied upon by Shri Soni, learned Authorised Representative, on going through the same, I find that in the said case the fact is that the raw material got destroyed even before the manufacturing of final product. Therefore the facts of that case are entirely different from the facts of present case. Accordingly, the judgment of CCE Madras vs. Union Carbide India Limited (supra) is clearly distinguished.
6. As per my above discussion and findings, I am of the considered view that appellant is entitled for the credit on the input and packaging material used for testing products. Hence the impugned order is not sustainable accordingly the same is set-aside and the appeal is allowed.
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