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CX – Excess quantity filled in Injection is as per provisions of Drugs & Cosmetics Rules, 1945 and hence appellant is not required to pay any duty thereon - Appeal allowed: CESTAT

By TIOL News Service

MUMBAI, MAR 02, 2014: THE appellant is a medicament manufacturer.

The facts of the case are mentioned thus – "During the course of manufacturing activity, they drew control sample for testing and not paid duty on that. The appellant has also procured certain inputs which were used as trial on machine and as required by the Drugs & Cosmetics Rules, they have to fill excess quantity in the injection, therefore, revenue is of the view that appellant are required to pay duty on the excess quantity involved in the injection sold by them."

Be that as it may, SCN was issued to the appellant demanding CE duty and the same was confirmed by the CCE, Belapur along with penalty and interest.

The appellant has accepted the duty demand raised for control sample and inputs used in the machine trial but in respect of the remaining part of the order viz. excess quantity in injection sold, the appellant contests the same before the CESTAT.

After hearing both sides, the Single Member Bench observed that in the matter of duty liability on 'Control sample', the Tribunal in the case of Dabur India Ltd. 2005-TIOL-171-CESTAT-DEL-LB has held that control samples retained in factory are not liable to duty if proper account is maintained. Inasmuch as since the appellant was maintaining proper account for control samples they are not required to any pay duty although they are not contesting duty liability. And so, they are also not required to pay interest and penalty for not paying duty on control samples. As regards inputs used in trial run of machine, the same are entitled for CENVAT credit in view of the decision in Kolsite Machine FabrikP. Ltd. 2004 (176) ELT 673 but since the appellant is not contesting the issue the interest and penalty was waived.

In the matter of payment of duty on the 'excess quantity in the injection' the Bench observed that since filling of excess quantity is mandated by the provisions of the Drugs & Cosmetics Rules, 1945, the appellant is not required to pay duty on the same. And therefore, question of penalty and interest also does not arise.

The appeals were disposed of in the above manner.

(See 2014-TIOL-323-CESTAT-MUM)


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