TaxTMI 
TaxTMI 
2015 (4) TMI 355
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....anufactured at different places under the provisions of the Drugs and Cosmetics Act, 1940 and Rules made thereunder. Under the agreement entered into between the respondent on one hand and the job workers on the other hand, raw material as well as packing material is supplied to the job workers and as per the instructions of the respondent loan licensee, the job workers manufacture the medicaments under the supervision of the loan licensee, i.e. the respondent so as to see that the quality of the medicaments manufactured by the job workers is as prescribed by the loan licensee. 3. Several notices had been given to the respondent as well as to the job workers by the Commissioner of Customs and Central Excise calling upon them to show cause as to why the respondent, the loan licensee should not be treated as a manufacturer as per the provisions of the Central Excise and Salt Act, 1944 in respect of the medicaments manufactured by the job workers and on that basis the respondent was also called upon to make payment of certain duty and the job workers were also called upon to show cause as to why they should not be directed to pay penalty etc. 4. After hearing the concerned parti....
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....visions with regard to the manufacturer of medicaments, who gets medicaments manufactured at different places and by different persons. He had drawn our attention to the fact that as per the provisions of the Drugs and Cosmetics Act, 1940 and the Rules made thereunder, liability in respect of the quality of the medicament was that of the respondent and therefore, the respondent was the real manufacturer and not the job workers. He had further submitted that though the job workers were doing the work in their own premises, the raw material as well as packing material was being supplied to them by the respondent and they were working under strict supervision of the respondent loan licensee and therefore, in fact the respondent loan licensee was the manufacturer. Even in Form No.24A referred to hereinabove, the respondent used to give details of the places where the job workers were carrying out manufacturing process under the supervision of the respondent. It had been further submitted that as the loan licensee was the manufacturer of medicaments under its own brand name, the price at which the goods, i.e. the medicaments were being sold was the assessable value in respect of the med....
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....ed by the job workers were sent by the job workers to the respondent. The job workers were not selling the goods in the market and therefore, the value at which the goods were transferred to the respondent by the job workers would become assessable value and for determining the said value, the principles laid down by this Court in the case of Pawan Biscuits (supra) are to be followed. 13. Looking at the law laid down in the aforesaid judgment by this Court, the assessable value is to be determined by adding the value of raw material to the cost of labour work and profit of the job workers. Thus, for the purpose of determining the assessable value, only the aforesaid factors can be considered and not the market value at which the respondent was selling the medicaments. 14. It had been further submitted by the learned counsel appearing for the respondent that the respondentcompany was a loan licensee as per the provisions of the Drugs and Cosmetics Act, 1940 and the Rules made thereunder. He had submitted that the manufacturer of drugs/medicaments is having certain responsibilities with regard to quality of the drugs manufactured. Even if a manufacturer gets the drugs/medicamen....
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....e drugs/medicaments manufactured by another person under his supervision and he would be liable if the drugs manufactured by someone else are not as per the prescribed quality. Though the drugs/medicaments might not have been manufactured by the one who is a licensee and the actual manufacturer is guilty of manufacturing substandard drugs, the licensee becomes responsible and liable under the provisions in the said Act. 19. On the other hand, the provisions of the Central Excise Act, 1944 are for the purpose of imposing duty on the goods manufactured. The manufacturer becomes liable to pay certain duty as per the provisions of the said Act. 20. Thus, the term 'loan licensee' used by the learned counsel appearing for the appellant is not much relevant as we are not concerned with the quality or standard of the drugs/medicaments manufactured by the loan licensee or anybody else manufacturing medicaments for him. 21. The learned counsel appearing for the respondent had also drawn our attention to a copy of one of the agreements entered into between the respondent and the job workers. Upon going through the said agreement, we find that the said agreement shows that the job wor....