DSM ANTI INFECTIVES INDIA PVT. Vs. CCE

JUDGEMENT

(1.) THIS appeal is directed against order in original dated 11/10/04 that imposed penalty on the appellant under Rule 173Q of the Central Excise Rules, 1944.

(2.) THE relevant fact that arise for consideration are appellant were manufacturers of Bulk Drugs falling under Chapter 29. Appellants were clearing the goods on payment of duty to their suppliers. Supplies made by the appellant during the relevant period were rejected by their purchasers, which were brought back to their factory for re -conditioning, re -making under Rule 173H of Central Excise Rules, 1944. Subsequent to such re -conditioning and re -making, appellant removed the said goods without payment of duty, as provided under Rule 173H. Show cause notice was issued to the appellant demanding the duty on such clearances on the allegation that the activity undertaken by the appellant on the returned goods, amounts to manufacture of goods as per Chapter Note 2 of Chapter 29 of the Central Excise Tariff Act, 1985. The adjudicating authority, in the first round of litigation confirmed the demand and also imposed penalty and on an appeal, Tribunal set aside the said order and remanded the matter back to the adjudicating authority for considering the eligibility of the appellant for modvat credit on the finished goods received back by him and then work out of duty, if any, for imposition of penalty. The adjudicating authority in deno adjudication held that modvat credit eligible to appellant would completely offset the demand of the duty, and hence no demand was confirmed against the appellant, but imposed the penalty of Rs. 5,00,000/ - under Rule 173Q. Hence this appeal.

(3.) THE Learned counsel appearing on behalf of the appellant submits that nowhere in show cause notice there is allegation that appellant had intention to remove the goods without payment of duty. It is his contention that since no specific clause of Rule 173Q was invoked to impose penalty, this issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of Amrit Foods v. Commissioner of Central Excise, U.P. as reported at 2005 (190) E.L.T. 433 (S.C.).