EBERS PHARMACEUTICALS LTD Vs. CCE

JUDGEMENT

(1.) IN these two Appeals filed by M/s. Ebers Pharmaceuticals Ltd. arising out of a common order in Appeal dated 29.12.1992, the issue involved is whether the value of the goods manufactured by and cleared by other units are to be included in the value of clearances of goods by the Loan Licensee for the purpose of Notification No. 175/86.

(2.) BRIEFLY stated the facts are that the Appellants manufacture P or P medicaments. They also get the medicaments manufactured out of raw material supplied by them from M/s. Schefata Pharmaceuticals and Development Laboratories and M/s. Gan Pharmaceuticals P. Ltd. (hereinafter referred to as Schefata and Gan) on loan licence basis. The Assistant Collectors under two Adjudication orders dated 19.6.1992 and 28.7.1992 denied them the benefit of Notification No. 175/86 -CE dt. 1.3.1986 and confirmed the demand of Central Excise duty, holding that the value of clearances of branded goods by M/s. Schefata and M/s. Gan are to be clubbed with the value of clearance of the Appellants for the purpose of Notification No. 175/86 for the following reasons:

(3.) THE Assistant Collector relied upon the decision of the Gujarat High Court in the case of Indica Laboratories v. U.O.I. . On appeal filed by the Appellants, the Collector (Appeals) in the impugned common order rejected the appeals, holding that the Notification No. 175/86 used the words 'manufacture' and 'factory' in different context and made it clear that the 'place of manufacture' and 'manufacturer' are different concepts in the Central Excise Act and Rules; that the omission of the word 'on behalf of (a manufacturer) from text of the Notification is very significant in that clearances made from a factory is no more considered to be on behalf of a manufacturer in respect of goods manufactured out of raw material supplied by the loan licensee; that if it is proved that the loan licensee fits into the definition of a manufacturer under the provisions of Act, such clearances have to be considered as made by the loan licensee himself; that the concept of loan licensee is given a legal sanction under the Drugs and Cosmetics Act and such loan licensees are considered as manufacturers of the goods manufactured on loan licence basis elsewhere, under the Central Excise Act.