Full Judgment
Such generic name injections are cleared at nil rate of duty under Heading 3003.20 2. For the manufacture of these branded and generic injections, common inputs are used and at the receipt thereof, Modvat credi is availed and no separate accounts are maintained. Therefore, as provided for vide Rule 57CC, the assessee was reversing 8% of the value of the generic injections cleared under Heading 3003.20 at nil tariff rate of duty.
The branded injections were being cleared at appropriate rate of duty.
3. During the course of manufacture of these injections a product referred as D-21 emerges which is a known bulk drug classified under Heading 29.36 which is also cleared from the factory on payment of duty under that heading and is being used in the manufacture of the branded and generic injections.
4. The appellants were issued a Notice dated 6.8.1998 demanding duty amounting to Rs 59,46,161/- under the proviso to Section 11A (1) on the quantity of D-21 cleared for captive consumption in the manufacture of DSP injections which were cleared under generic name as per the rate of duly under Heading 3003.20 and by reversing 8% of the amount under Rule 57CC during the period 24.4.1997 to 9.2.1998.
5. The Commissioner (Appeals), while appreciating that the benefit of Notification 10/96-CE dated 23.7.1996 was available to the product D-21 captively consumed within the factory of production, however, did not grant the benefit of that Notification on the ground, that benefit of the Notification was not claimed in the classification list and therefore it could not be granted. Since the Commissioner (Appeals) did not dispute the admissibility or eligibility of the said notification, the denial thereof cannot be upheld on the grounds as arrived by him.
6. Since D-21 was exempt, when used for preparing the branded goods on which appropriate duty was paid, such quantity of D-21 cannot be charged to duty at the intermediate stage, since the branded injections made (hereafter discharged duty and Modvat credit availed, on the inputs that went (to manufacture of D-21 would be eligible. However, the position for the quantity of D-21 used in the manufacture of exempted goods would be put on a separate fooling since D-21 was exempt under Notification 10/96-CE and being captively used in the manufacture of unbranded generic injections and that claim is being made even to day by the Ld Advocate before us, the application of Rule 57CC reversal of 8% of the value of such D-21 would be called for when such D-21 was taken for captive consumption in the manufacture of generic injections, since these D-21 was obtained from inputs on which Modvat credit was availed and no separate accounts were maintained. The demands at 8% of these D-21 under the provisions of Rule 57CC can therefore be upheld.7. Since the appellants have paid under Rule 57CC 8% demands as submitted by them on the value of the generic inujections which would be more than the value of D-21 as value addition from D-21 stage of generic injection stage would have taken place and Rule 57CC reversals on the generic medicine are not being doubted, no merits are found in the Commissioner's order of demanding an amount of Rs 56,27,977/-calculating at % of the price of D-21 and/or the penalties and interest order arrived by him.
8. Rule 57CC recoveries cannot be made at two stages i.e. at D-21 stage and at generic injections stage.
9. Appeal allowed after setting aside the impugned order, in the above terms.