2011 (3) TMI 1225 - AT - Central Excise

Pharma company wins duty dispute on loan license basis, tribunal sets aside duty demand

The tribunal ruled in favor of the appellant pharmaceutical company in a dispute over duty liability on final products manufactured under a loan license ... Duty demand - case of the Revenue that the appellant is the manufacturer of the medicaments and has to discharge the duty liability on the final products based upon the appellant's sale price from the depot, while it is the assessee's contention that the loan licensee has discharged the duty based upon the cost of production - Held that:- The facts are undisputed in this case as medicaments were being manufactured under loan license basis from M/s LHL. It is also undisputed that M/s. LHL's discharge of duty liability was based upon the cost of production. On perusal of the Final Order in assessee's case[2007 (11) TMI 192 - CESTAT, MUMBAI] in the appellants own case the issue involved were identical, except that loan licences were different. Since the issue has already been decided by this Tribunal in favour of the appellants no reason to deviate from such views. Issues:1. Duty liability on final products based on sale price vs. cost of production.2. Applicability of previous tribunal judgments.3. Pending Supreme Court decision on similar matter.Analysis:1. The case involves a dispute regarding duty liability on final products manufactured under a loan license basis. The appellant, a pharmaceutical company, entered into an agreement with another company for manufacturing medicaments. The Revenue claimed duty should be based on the appellant's sale price, while the appellant argued it should be based on the cost of production by the loan licensee. The adjudicating authority confirmed a duty demand against the appellant but dropped proceedings against the loan licensee. The appellant challenged this decision.2. The appellant's counsel cited previous tribunal judgments in their favor, where similar issues were decided in their favor. The counsel argued that the issue had already been settled in their favor in previous cases involving different job workers and loan licensees. On the other hand, the Departmental Representative referred to a previous tribunal judgment and highlighted a difference of opinion, indicating that the matter was pending before the Supreme Court. The DR suggested keeping the matter pending until the Supreme Court's decision.3. Upon considering the submissions, the tribunal found the facts undisputed that the medicaments were manufactured under a loan license from the other company, and the duty liability was based on the cost of production by the loan licensee. Referring to previous tribunal judgments in the appellant's own case, the tribunal noted that the issue had already been decided in favor of the appellant. The tribunal upheld the appellant's argument and set aside the impugned order, allowing the appeals. The tribunal decided not to deviate from its previous views and ruled in favor of the appellant based on the established precedent.