CA Bimal Jain
Redicura Pharmaceuticals Pvt. Ltd. (the Appellant) is a manufacturer of P&P medicines chargeable to Central Excise duty. For the period April 1, 2003 to October 31, 2003 (impugned period), the Appellant was availing SSI Exemption under Notification No. 9/03-CE dated March 1, 2003 (SSI Notification). Further, during the impugned period, the Appellant in addition to manufacturing the goods on their own account, which were being cleared by affixing their own brand name (Activity 1), were also manufacturing the goods of other persons called ‘loan licensees’ under job work agreement, which were cleared on payment of normal rate of duty by affixing the loan licensee’s brand name (Activity 2). Further, the Appellant also as loan licensee, were getting their goods manufactured through other manufacturers under job work agreements and those manufacturers were clearing the goods on payment of normal rate of duty by affixing the Appellant’s brand name (Activity 3).
The Department contended that eligibility for SSI exemption during impugned period must be determined by clubbing the clearances of the goods from Activity 1, Activity 2 and Activity 3, accordingly sought to deny the benefit of SSI Notification to the Appellant for the impugned period. The same was confirmed by the Order of the Joint Commissioner who confirmed the duty demand of Rs. 6,39,190/- along with interest under Section 11AB of Excise Act and imposed penalty of Rs. 10,000/- under Rule 25(1) of Excise Rules. Thereafter on appeal being filed to the Ld. Commissioner (Appeals), the same was dismissed. Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Delhi.
The Hon’ble CESTAT, Delhi relying upon the decision in the case of Indica Laboratories Pvt. Ltd vs UOI [1990 (50) ELT 210 ( Guj .)] and after observing that loan licensee had not hired any shift or any part of the factory premises of the Appellant and similarly the Appellant as a loan licensee, had not hired any shift or any part of the factory of the other manufacturers, held that the Appellant had manufactured the goods for loan licensees as a job worker only and, since, the goods manufactured for loan licensees had been affixed with the Brand Name belonging to the loan licensees, and for this reason the same had been cleared on payment of normal duty, the value of the clearances to loan licensees would not be includible for determining the aggregate value of clearances for home consumption.
Further, in respect of the goods got manufactured by the Appellant as a loan licensee through other manufacturers, the Hon’ble Tribunal held that it is the other manufactures, who have to be treated as manufacture and not the Appellant more so, when there is no dispute that the duty liability in respect of those goods had been discharged by those manufacturers.
Therefore, the value of these clearances also cannot be included for determining the aggregate value of clearances of the Appellant for home consumption for determining their SSI exemption.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: firstname.lastname@example.org)