NORRIS MEDICINES LTD. Vs. CCE & C

JUDGEMENT

(1.) Shri S. Suriyanarayanan, Learned Advocate appearing for the appellants states that the appellants have exported medicines and claimed modvat credit on the inputs used in the manufacture of such medicines. The exports were made under bond. Subsequently, the Dy. Commissioner has disallowed the modvat credit on the ground that goods in question are not patent or proprietary medicines but generic medicaments and hence not dutiable making the inputs ineligible for modvat credit under rule 57C of the Central Excise Rule, 1944. He has also imposed a penalty of Rs. 10,000/ - while disallowing the credit of Rs. 34,902/ -. The Commissioner (Appeal) has upheld the order of the Dy. Commissioner. It is the contention of the appellants that when goods are exported under bond, the credit on inputs is available under Rule 57F(13). Moreover, Rule 57CC(6) waives the requirement under Rule 57CC(1) in the case of export. The learned Advocate also cites the following case laws in his support: - -

(2.) Shri M.K. Gupta, learned Jt. C.D.R. appearing on behalf of Revenue states that the goods in question being generic medicines are fully exempted from duty and as a policy, no modvat credit is allowable on duty paid on inputs used in the manufacture of such exempted and non -dutiable goods.

(3.) After hearing rival submissions and perusal of the case records, I find that the goods in question have indeed been exported under bond. Therefore, the benefit of modvat credit under Rule 57F(13) cannot be disallowed. Moreover, it is the policy of the Government to encourage export, and neither the exported products nor the inputs used in the export product are required to suffer the levies imposed on goods taken for home consumption. Not only exports are allowed to be made without payment of duty under bond or under claim of rebate of duty paid but there are schemes to either allow rebate or draw back of duty on inputs used in the export product or allow manufacture in bond without payment of duty on inputs. The interpretation placed by the lower authorities on Rule 57C, 57CC and Rule 57F resulting in denial of credit of duty paid for inputs used in the export products is clearly against the Government policy to encourage export and free export products from domestic levies. I, have, therefore no hesitation in setting aside the orders of the lower authority and allowing the appeal. Before parting with the case, it is suggested that the rule making authority should clarify the rules and issue clear cut directions to the field officials so that credit of duty paid on the inputs is not denied when finished goods are exported.