BANNER PHARMACAPS (INDIA) PVT. Vs. COMMISSIONER OF CENTRAL

JUDGEMENT

(1.) THIS appeal arises from Order -in -Original No. 16/05 dated 5.5.2005 passed by the Commissioner of Central Excise, Bangalore confirming demands in terms of proviso to Section 11A of the CE Act and also imposing penalties. The appellants are engaged in the manufacture of P or P Medicines falling under Chapter Heading 29 and 30 of Central Excise Tariff Act, 1985 on their own account and also on loan licensee basis for 13 units. They had adopted loan licensee's depot prices for the purpose of payment of CE duty as per Section 4(1)(b) of CE Act read with Rule 7 of CE Valuation (Determination of Price of Excisable goods) Rules 2000. In respect of 10 of the loan licensees and in respect of 3 other loan licensees, they were adopting cost construction method i.e. landed cost of the raw materials plus job charges plus profit of the job worker for the purpose of payment of CE duty. The department found this to be inconsistent in adopting different methods of valuation for different loan licensees and hence, enquiry was initiated. According to the Department, the price adopted by the assessee for loan licencee is in contravention of provisions of Section 4 of CE Act read with relevant Rules. Inasmuch as they had manufactured the said medicines and cleared the same to the loan licensees on payment of duty on the value arrived at by adding the landed cost of the raw materials to the job charges instead of adopting the depot price/sale price of the loan licensee. Thus, there was allegation of undervaluation and huge demands have been raised.

(2.) THE learned Counsel rejected the contentions for the valuation adopted by the assessee is in terms of well laid down judgments of the Apex Court and the Tribunal and contended that they are not required to value the goods at the depot price of the loan licensee. However, the Commissioner rejected their plea and held that the price required to be adopted was on the basis of the price at which the goods were valued by the loan licensees at their depot.

(3.) WHEN the stay applications came up for consideration, it was submitted by the assessee's that the loan licensees were of independent manufacturers and that the assessee being only a job worker, who is required to pay duty on the basis on which the assessee has declared the price and the changed view of the Revenue was not approved by the Tribunal in a large number of judgments. The Tribunal after due consideration of the Board's Circular and the Apex Court and Tribunal's rulings granted full waiver and have listed the matter for final hearing. The Tribunal clearly noted that the issue in the present case was in all force with a similar issue decided by this bench in the case of Elvina Pharmaceuticals Ltd. and Ors. v. CCE, Belgaum reported in 2005 (70) RLT 734 (Cestat -Bang.), which has been decided in the assessee's favour. The matter came up for hearing, the learned Counsel submits that the issue is covered in their favour by following the ratio of the following judgments.