ORDER
A.C.C. Unni, Member (J)
1. This is a Departmental Appeal filed against the order of the Collector of Central Excise (Appeals), Hyderabad dated 17-1-1994 by which the Collector (Appeals) had set aside the order of the Assistant Collector demanding a duty of Rs. 2,14,474/- and imposing a penalty of Rs. 1,000/- on the respondent.
2. When the matter was called none appeared for the respondent. Since the matter appears to be covered by earlier decisions of the Tribunal, we took up the matter for disposal on hearing the Departmental Representative.
3. The respondents who are manufacturers of P & P Medicaments falling under Chapter 3003.10 of the Schedule to the Central Excise Tariff Act, 85 were manufactured the goods on behalf of loan licensee namely M/s. Pharmasia Ltd. They filed a Classification List dated 4-5-1992 for clearing the medicaments manufactured on behalf of M/s. Pharmasia Ltd. claiming concessional rate of duty of 5% under Notification No. 175/86 on the ground that the clearances of the medicaments of their own brand as well as those of M/s. Pharmasia Ltd. did not exceed the value of Rs. 75 lakhs and that M/s. Pharmasia Ltd. was a SSI Unit eligible for exemption under Notification No. 175/86. The Department however alleged that M/s. Pharmasia Ltd., the loan licensees, had effected value of clearances in excess of Rs. 75 lakhs. On that basis, the appellants were issued a show cause notice demanding differential duty based on normal rate of 15% for the clearances effected on behalf of the loan licencees. The Assistant Collector who adjudicated the matter confirmed the demands totalling duty amount of Rs. 2,14,474 and imposed a penalty of Rs. 1,000/-.
4. When the matter came up before the Collector (Appeals) in appeal filed by the present respondent, the Collector (Appeals) held that the proviso to paragraph 3 of Notification No. 175/86 had made it clear that for the purpose of computing the aggregate value of clearances, the clearances of any excisable goods where a manufacturer affixes the specified goods with a brand name or trade name of another person who is not eligible for the grant of exemption under the notification, shall not be taken into account. The Collector (Appeals) held that the Assistant Collector had erred in computing the aggregate value of clearances of M/s. Pharmasia Ltd., by including clearances of goods which had suffered duty at normal rates. Taking note of the submissions made on behalf of M/s. Targof Pure Drugs (P) Ltd. that the loan licensees for whom they were claiming the concessional rate of duty is eligible for the same having regard to the Gujarat High Court decision in India Laboratories Pvt. Ltd. v. Union of India reported in 1990 (50) E.L.T. 210 (Guj.). Collector (Appeals) held that loan licencees getting their P & P Medicines manufactured at SSI factories of others, but under their own supervision and control, from their own material and with their brand name affixed on manufactured goods, are entitled to exemption. Collector (Appeals) set aside the Assistant Collector’s order and allowed consequential relief to the present respondents.
5. Ld. SDR, Shri H.K. Jain submitted that the Collector (Appeals) had not taken into account the fact that M/s. Pharmasia Ltd., the loan licensees, had during 1992-93 crossed the value of clearances of Rs. 75 lakhs on 2-5-1992 and had started paying normal rate of duty and thereby had become ineligible for concessional rate of duty under Notification No. 175/86. Therefore, from 2-5-1992 onwards, the clearances made by the respondents M/s. Targof Pure Drugs have to be treated as clearances made for a unit which is ineligible for concessional rate of duty under Notification No. 175/86. Therefore, the respondents are liable to pay the effective rate of duty @ 15% for the value of clearances exceeding Rs. 75 lakhs. Distinguishing the decision in the Gujarat High Court judgment in India Laboratories Pvt. Ltd. (supra), ld. SDR submitted that in the said decision the Hon’ble High Court had held that to be eligible for the exemption in terms of Notification No. 175/86, the unit has to be a SSI Unit.
In the instant case, the fact was that the loan licensees had crossed the exemption limit of Rs. 75 lakhs and had paid the normal rate of duty.
6. We have considered the submissions. We find that the factual submissions of the Departmental Representative based on the Grounds of Appeal are not contested by the respondents. We also find that the Collector (Appeals) order does not refer to the fact that in the instant case, the loan licensees had crossed the clearance of Rs. 75 lakhs before the filing of Classification List by the respondents. In view of the said factual position, we find that the submissions of ld. SDR are well founded.
7. As a result, we restore the Order-in-Original of the Assistant Collector after quashing the impugned Order-in-Appeal.