Tribunal upholds appeal against Central Excise demand, finding raw material used for vaccine R&D

The Tribunal upheld the appellant's contention in an appeal against the Commissioner of Central Excise's order confirming a demand of &8377; 44,24,726/- with interest and penalties. The Tribunal rejected the Revenue's denial of benefit of Notifications for raw material import, finding that the raw material was used for research and development activities essential for manufacturing vaccines within the 100% EOU. As there was no diversion or non-use of the raw material, the Tribunal set aside the impugned order, allowing the appeal.

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Issues:
1. Confirmation of demand by Commissioner of Central Excise
2. Denial of benefit of Notifications for raw material import
3. Use of raw material for research and development activities
4. Applicability of Notifications on raw material procurement
5. Allegations of diversion or non-use of raw material

Confirmation of demand by Commissioner of Central Excise:
The appellant filed an appeal against the order passed by the Commissioner confirming a demand of &8377; 44,24,726/- with interest and penalties imposed. The adjudicating authority also held that the goods in question are liable for confiscation and gave an option to redeem them on payment of a redemption fine.

Denial of benefit of Notifications for raw material import:
The appellants, a 100% EOU engaged in manufacturing vaccines, imported raw materials without duty payment under specific Notifications. The Revenue alleged that some inputs received without duty payment were used in research and development activities, leading to the issuance of a show cause notice denying the benefit of the Notifications.

Use of raw material for research and development activities:
The appellant argued that the inputs received without duty payment were essential for carrying out research and development activities necessary for manufacturing vaccines. They contended that without such activities, the manufacturing process could not be completed properly. The appellant cited a Tribunal decision supporting their position.

Applicability of Notifications on raw material procurement:
The Revenue contended that since the raw material received without duty payment was not used in the manufacture of the final product, the appellants were not entitled to the benefit of the Notifications.

Allegations of diversion or non-use of raw material:
The Tribunal found that the raw material imported without duty payment was used for research and development activities essential for manufacturing human vaccines. Referring to a previous Tribunal decision, the Tribunal rejected the Revenue's argument that duty should be paid on such raw materials. As there was no allegation of diversion or non-use of the raw material within the 100% EOU, and the research and development facility was within the EOU, the Tribunal upheld the appellant's contention, setting aside the impugned order and allowing the appeal.

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