TaxTMI 
TaxTMI 
TaxTMI 
2015 (2) TMI 824
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....-2002. He has imposed an equivalent amount of penalties on the importer apart from penalties of Rs. 50 lakhs and Rs. 10 lakhs each on Mr. Atul Vyas and Mr. Mahesh Trivedi, Directors of the importing firm in each of the orders. He has also imposed penalties of Rs. 1 crore and Rs. 50 lakhs each on Mr. Samir Udani, Director of La Cure Pharmaceuticals Ltd., Umbergaon, (a 100% EOU and buyer of the goods from M/s. NGDH) and M/s Ruskin Chemie Pharma, Mumbai, M/s. Morepen Laboratories, New Delhi, M/s. Ankur Drugs and Pharma Ltd., Mumbai and M/s. G.C. Chemie Pharma Ltd., Mumbai, high seas sellers of the raw materials to M//s NGDH and buyers of the finished goods from M/s La Cure Pharmaceuticals Ltd. in each of the case. Aggrieved of the same the appellants are before us. 2. The facts relevant to the case are as follows. M/s. NGDH had imported bulk drugs, through high seas sale, by availing the benefit of notification No. 47/2002-Cus under the cover of advance licences issued to them. As per the terms and conditions of the licence, they were required to manufacture "Drug formulations dispersible/Soluble Powder and Granules". M/s NGDH undertook compaction of the bulk drugs and cleared the co....
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....g agent. Granulation is extensively used in the manufacture of tablets and pellets. As per Pharmajournal.com (Vol 1 No. 9 of 2012), in the article titled The Pharma Innovation, it has been stated that "roll compaction is a widely used dry granulation method. It can be especially suitable for moisture or heat sensitive drugs, because this technique requires no liquid binder and drying step. In roll compaction process, the powder is fed between two counter rotating rolls and compacted to dense ribbons. The produced ribbons and subsequently broken into granules." What the appellant had undertaken was compact granulation, which as per technical literature is a well-recognized process. (2) As per the Advance Licences issued to the appellant, the appellants were permitted to import "relevant bulk drug" tand the finished product required to be exported was "Drug formulation dispersible/Soluble Powder and Granules (Compacted)". The appellant had fulfilled the export obligation by undertaking "deemed exports" by way of supply to a 100% EOU, namely, M/s La Cure Pharmaceuticals. The compacted granules were cleared as deemed exports without payment of duty to M/s La Cure under cover of AR 4, ....
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....DH and therefore, they cannot be said to have aided or abetted any commission of offence by NGDH. Therefore, no penalty can be imposed on them. (7) Reliance is also placed on the decisions of this Tribunal in the case of Dina International [2003 (158) ELT 783], Ramakrishna Exports [2008 (224) ELT 113] and Reliance Industries Ltd [2013 (293) ELT 679] in support of the above contentions. Accordingly it is pleaded that stay be granted against the impugned order. 4. The ld. Addl. Commissioner (AR) appearing for the Revenue re-iterates the findings of the adjudicating authority. He submits that a conspiracy was hatched by the importer appellant along with 100% EOU and high seas sellers to evade customs duty by undertaking a process which did not amount to 'manufacture' and re-supplying the same goods back to the high seas sellers without payment of customs duty on the raw materials and excise duty on the finished products. This is a novel modus operandi adopted by the appellants to defraud the exchequer. Accordingly he pleads for putting the appellant to terms. 5. We have carefully considered the submissions made by both the sides. 5.1 It will be useful at this juncture to ....
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....sold or disposed of in another manner; Provided that where final goods in respect of which the said materials have been imported have already been manufactured and supplied as required under this notification, the importer may use th4 said materials for the manufacturing of any other goods; (6) that the imports and exports are undertaken through sea ports Mumbai, Sikkim, Kolkatta, cochin, Kandla, Mangalore, Marmagoa, Chennai, Nhava Sheva, Pardeep. Tuticorin, Visakahpatnam, Kakinada, Mardalla, Dahej, Mudra, Nagapattinam, Okha and Pipavav or through any of the airports at Ahmedabad Bangalore, Mumbai, Kalkatta, Bhubaneshwar, coimbnatore, Nagpur, cochin, Delhi, Hyderabad, jaipuir, China,Srinagar, Trivandrum and Varanasi for through any of the Inaldn container deports at banga,ore, coimbatore "Delhi, Ghuwati, Hyderabad, Kanpur, Ludhiana, Moradabnad, Pimpri9Pune), Pitampur(Indore), Agra, Faridabad, jaipur, guntur, nagpur, Varanasi, Surat, Jodhpur,Salem. Tirpur, Sinanallur,Walluj, Bhiwadi, Malanpur, nasik, Rudrapur (Nainital), Dighi(Pine) Vadodara, Daulatabad(Wanjar) Waluj, Kota, Udaipur, Ahmedabad, Jalanhdhar, Bhilwars, Pondicherry and Garhi Harsaru or through Land Customs Stations at ....
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....ntainer- manufactures) provided the said containers are exported out of India within 6 months or such further period as permitted by Customs; (i) supplies made to projects founded by United Nation agencies; (j) supplies made to nuclear power projects through competitive binding; (iv) "Export processing one" "hundred percent of export oriented units' and "Special economic zones'; have the same meaning as in Explanation 2 to Section 3 of the Central Excise Act, 1944 ( 1 of 1994 ) respectively; (v) "Export and Import Policy' means Export and Import Policy 2002-2007, notified vide Notification No. 1 / 2002-2007, dated the 31 st march, 2002 5.2 From a reading of the notification, the following picture emerges. The exemption is on materials required for the manufacture of final goods. The imported goods should be covered under an Advance Licence for deemed exports issued in terms of para 4.1.1 of the Exim Policy 2002-2007. Final goods means supplies made, inter alia, to 100% EOUs. Once these substantive conditions are satisfied, the exemption is available. It is not the contention of the Revenue that any of these conditions are satisfied, the exemption is available. It i....
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....ditional customs duty only ............................................................................................................................................. 4.1.5 Advance Licence shall be issued in accordance with the Policy and procedure in force on the date of issue of licence and shall be subject to the fulfillment of a time bound export obligation as may be specified." "Deemed Exports" 8.1 "Deemed Exports" refers to those transactions in which the goods supplied do not leave the country and the payment for such supplies is received either in Indian rupees or in free foreign exchange. "Categories of Supply" 8.2 The following categories of supply of goods by the main/ sub-contractors shall be regarded as "Deemed Exports" under this Policy, provided the goods are manufactured in India: (a) Supply of goods against Advance Licence/Advance Licence for annual requirement/DFRC under the Duty Exemption /Remission Scheme; (b) Supply of goods to Export Oriented Units (EOUs) or units located in Special Economic Zone (SEZs) or Software Technology Parks (STPs) or Electronic Hardware Technology Parks (EHTPs); (c) Supply of capital goods to holders of licences under the Ex....
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.... conditions stipulated either in the licence or in notification No. 47/2002-Cus and therefore, denial of exemption to the appellant in the impugned order is prima facie unsustainable in law and we hold accordingly. 5.6 As per the technical literature submitted by the appellant "compacting" of dry powder is a process undertaken in pharmaceutical formulations. We have also perused the Manufacturing Licence issued to the appellant under the Drugs & Cosmetic Rules, 1945. As per the licence dated 17-6-1986, the appellant has been issued licence to manufacture Compacted Granules of various bulk drugs such as Theophylline, Metranidazole, Ofloxacin, and so on. Thus under the Drugs and Cosmetics Rules also, the activity undertaken by the appellant amounts to 'manufacture'. 5.7 We further notice that the issue whether compacting amounts to 'manufacture' was specifically examined by a Committee consisting of officers from DGFT, Dept. of Industrial Promotion & Policy and Dept. of Pharmaceuticals. This Committee in the meeting held on 21-12-2010 concluded that the compacting process is a manufacturing process in itself which is intermediate stage before making a tablet. Thus w....