MEDISPAN LTD. Vs. CCE

JUDGEMENT

(1.) THE appellant is aggrieved with Order -in -Appeal No. 51/98 (M -II) dated 27.2.1998 by which the learned Commissioner (Appeals) has confirmed the lower authority's order disallowing the modvat credit in terms of Rules 571 of Central Excise Rules, 1944. The appellants manufactured pharmaceutical products falling under chapter 30 of the Central Excise Tariff Act, 1985. Among the pharmaceutical products, they manufacture Ampicillin capsules which are exclusively for export and it is manufactured under generic name "Ampicillina". The product also carries the trade mark of 'Medispan' on the said product. It was classified as P or P Medicine under chapter heading 3003.10 attracting duty at 15% adv. and the classification list in this case had been approved on 9.3.1995. The lower authority took a view that the product required to be classified under chapter heading 3003.20 attracting nil rate of duty. He took a view that they had manufactured and exported the aforesaid product affixed with their monogram under bond between 23.1.1995 and 12.6.1995 and had availed the credit on the input used in the manufacture of aforesaid medicament to the extent of Rs. 10,39,086/ -. Since the product attracted NIL rate of duty in the revised classification, adopted by the Asst. Commissioner. He, therefore, held that credit availed on the input needs to be expunged in terms of Rule 571 inasmuch as no credit of duty is allowable on inputs when final products are cleared at nil rate of duty as per Rule 57 -C. Appellants contended that even if the final product is exempted, credit availed cannot be denied if the appellants have paid the duty on the final product; that the department itself was allowing them to pay duty on the exempted product and to avail credit; that it is the option of an assessee to claim or not to claim the benefit of notification; that the assessee cannot be denied the benefit of modvat credit of duty paid on the inputs used in the manufacture of final product on which duty is paid even though the final product is exempt from duty; that the Asst. Commissioner failed to note that the product is a P or P Medicine in view of the proviso to note 2 of chapter 30 of the Tariff; that the AC failed to note that the goods are being exported and if the modvat credit is to be denied, the duty paid thereon will also have to be refunded; that AC erred in involving Rule 571 which according to the appellants will apply to cases where the credit has been taken on account of an error, omission or misconstruction on the part of the manufacturer; that these three requirements are not satisfied in the instant case.

(2.) THE Commissioner (Appeals) did not agree with their contention and dismissed their appeal and hence appellants are aggrieved with his order.

(3.) CCE Chennai v. Indian Organic Chemicals Ltd. : 2001 (43) RLT 594 : 2001 (138) ELT 209 (T -Chennai) : 2001 (95) ECR 238 (T)