CCE Vs. ARBINDO PHARMA LTD. AND PV

JUDGEMENT

(1.) THE respondents are manufacturing bulk drugs and intermediates thereof in their factory at Pondicherry. What are called "spent solvents" emerge, besides the above final products, in the course of manufacture. During the period March 1997 to August 1999, the Company cleared certain quantity of spent solvents without payment of duty. During the same period, they also cleared scrap of packing materials without payment of duty. The Department in a show cause notice demanded duty of excise on the above clearances, invoking the proviso to Section 11A(1) of the CE Act, 1944. Interest on duty was also sought to be recovered under Section 11AB. The show cause notice also proposed penalties on the Company under Section 11AC and Rule 173Q of the CE Rules, 1944. In their reply to the show -cause notice, the respondents disputed the assessable value of the goods on various grounds. They also resisted the penalties proposed. The original authority in adjudication of the dispute, confirmed the demand of duty to the extent of Rs 55,230/ - against the Company after accepting their plea of cum -duty price under Section 4(4)(d)(ii) of the Act. It also imposed maximum penalty (Rs. 55,230/ -) on the assessee under Section 11AC on the ground of clandestine removal of goods. A separate penalty of Rs. 2.5 lakhs was also imposed on the assessee under Rule 173Q on the ground of violation of various provisions of CE Rules, 1944. Interest on duty was also demanded from the assessee under Section 11AB. A separate penalty of Rs. 10,000/ - was also imposed on the Managing Director under Rule 209A. Aggrieved by the decision of the original authority, the Company and its Managing Director preferred appeals to the Commissioner (Appeals) pleading inter alia that spent solvents were not excisable. The appellate authority accepted the plea of non -excisability and set aside the demand of duty on spent solvents and consequently the penalty also. Hence these appeals of the Revenue.

(2.) AFTER examining the records and hearing both sides, I find that excisability of spent solvents was not an issue before the original authority. It, however, was raised as an issue before the first appellate authority by the respondents. The learned Commissioner (Appeals) considered their plea which was based on Hon'ble Supreme Court's decision in CCE v. Markfed Vanaspati and Allied Industries reported in 2003 (153) ELT 491 (SC). He also considered two other judgments of the Hon'ble Apex Court viz.Cadila Laboratories Pvt. Ltd. v. CCE, Vadodara reported in 2003 (152) ELT. 262 (SC) and Union of India v. Indian Aluminium Co. Ltd. Relying on these decisions of the Hon'ble apex Court, the Commissioner (Appeals) recorded a finding that spent solvents were not excisable.

(3.) LEARNED SDR pointed out that the question whether spent solvents were excisable or not had never been raised before the original authority and, further, that this question, raised before the first appellate authority by the assessee, was not properly examined by the Commissioner (Appeals).