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Sun Pharmaceuticals Industries Ltd V/S Commissioner of Central Excise & ST, Puducherry

Company & Directors' Information:- CENTRAL INDIA INDUSTRIES LTD. [Active] CIN = U02710WB1938PLC209971

Company & Directors' Information:- SUN INDUSTRIES LIMITED. [Active] CIN = U51909DL1991PLC045798

Company & Directors' Information:- SUN PVT LTD [Active] CIN = U24246RJ1984PTC003093

Company & Directors' Information:- G SUN INDIA PRIVATE LIMITED [Strike Off] CIN = U74899DL1995PTC071425

Company & Directors' Information:- THE CENTRAL INDUSTRIES LIMITED [Dissolved] CIN = U99999MH1949PLC010460

Company & Directors' Information:- SUN INDIA CORPORATION PRIVATE LIMITED [Strike Off] CIN = U65991TN1943PTC000994

Company & Directors' Information:- SUN INDUSTRIES LIMITED [Dissolved] CIN = U99999MH1947PTC005559

    Appeal No. E/497/2010 (Arising out of Order-in-Appeal No. 97/2010 (P) dt. 30.04.2010 passed by the Commissioner of Central Excise (Appeals), Chennai) and Final Order No. 40428/2018

    Decided On, 16 February 2018

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai

    By, MEMBER

    For Petitioner: Ashok B. Nawal And For Respondents: K.P. Muralidahran, AC (AR)

Judgment Text

1. The appellants are 100% EOU engaged in manufacture of bulk drugs. They had imported raw materials (inputs) packed in MS drums and HDPE drums availing concessional duty benefit of Notification No. 52/2003-Cus. as amended. Empty drums after use of the inputs were sold by the appellants in DTA. Department took the view that such clearances will attract customs duty in view of condition No. 4(b) of the notification. In adjudication process, duty of excise equivalent to aggregate of customs duties of Rs. 11,25,330/- was demanded from the appellant with interest and equal penalty was also imposed under Section 11AC. In appeal, the Commissioner (Appeals) vide the impugned order No. 97/2010(P) dt. 30.04.2010 took the view that the order of original authority has to be upheld to the extent of duty demanded on the sale of imported empty drums, while no duty can be demanded for such drums with inputs procured domestically. On these grounds, lower appellate authority ordered the adjudicating authority to rework the duty payable on the sale of imported drums along with interest and penalty under Section 11AC ibid. Hence this appeal.

2. Today when the matter came up for hearing, on behalf of the appellant, Ld. Consultant Shri Ashok B. Nawal submits that in the first place, the main drums have not been sold as such but as scrap either to scrap merchants or to their employees which fact has been brought to the attention of the Commissioner (Appeals). For this purpose, he draws our attention to the impugned order wherein this contention has been recorded by the Commissioner (Appeals). He points out that the Commissioner (Appeals) has taken a view that such drums of inputs procured from DTA were brought into EOU under Notification No. 22/2003-CE as amended. In respect of such goods, no duty can be demanded on the clearance of the said empty drums. This being so, Commissioner (Appeals) cannot take a different stand in respect of identical goods in which goods had been imported under Notification No. 52/2003-Cus. where the drums had been similarly cleared to the DTA. He relies upon the following case law:

(1) CCE Vs. West Coast Industrial Gases Ltd : 2003 (155) ELT 11 (SC)
3. On the other hand, Ld. A.R. Shri K.P. Muralidharan draws our attention to the observation of the Commissioner that the goods are empty drums and will continue to be used and sold as drums only. He also reiterated the findings of the Commissioner that the goods being reusable, the condition No. 4(b) of the notification will apply and hence duty can definitely be demanded in respect of these drums. He relies upon the following case laws:

(i) Sanmar Speciality Chemicals Ltd. Vs. CCE & ST Vapi : 2016 (344) ELT 982 (Tri.-Ahmd.)

(ii) CC Bangalore Vs. Suretex Prophylactics (I) Ltd : 2006 (195) ELT 325 (Tri.-Bang.)

4. Heard both sides and have gone through the facts.

5. As we understand, the entire controversy rests on whether the drums in which the inputs have been imported are suitable for repeated use and hence falling within the mischief of condition No. 4(b) of the Notification No. 52/2003-Cus. From the facts on record and assertions of the appellants made before the lower authorities, it clearly emerges that the empty drums have been sold only as scrap to merchants and to their employees. True, these drums may well be used for some purpose or the other by the persons who purchase them like storing water which is apparently the purpose for which the employees buy these drums. However, for the purpose of the notification the test of being "suitable for repeated use", in our view, is whether the drums are being reused for containing and transporting the very same goods in which they had initially arrived. There is no such allegation or evidence brought forth. In the circumstances, we are of the considered opinion that the impugned goods are only in the nature of used packing material of a kind of unsuitable for repeated use which then should be allowed to be cleared without payment of any duty, as per provisions of 4(c) of the same notification.

6. Coming to the case law, relied up

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on by Ld. A.R. in Sanmar Speciality Chemicals (supra), the appellant therein had failed to establish that barrels are not capable of repeated use; per contra, the facts herein are different. We also find that the facts involved in the case of Suretex Prophylactics (I) Ltd. (supra) are not pari materia to the appeal at hand. 7. In the circumstances, we find merit in the appeal for which reason it is allowed with consequential relief, if any, as per law.