ORDER
K.K. Bhatia, Member (T)
1. The appellants manufacture pharmaceutical products and they are also availing the facility of Modvat credit on inputs used in or in relation to the manufacture of final product. They filed a letter dated 14-1-97 with the Commissioner of Central Excise for permission for destruction of certain quantity of medicines which had become unfit for human consumption after their expiry date. The appellants received a letter dated 26-7-99 from the Asst. Commissioner (Tech) of Central Excise, in which, it was informed to them that the Commissioner was pleased to grant the permission for remission of duty on the goods under the second proviso to Rule 49(1) of the Central Excise Rules, 1944 subject to the condition that the Modvat credit taken in respect of the inputs used in the manufacture of the said goods would have to be reversed. The party filed an appeal against this communication from the Asst. Commissioner before the CEGAT. The CEGAT vide its Final Order No. A/2344/2000/NB(SM) dated 21-12-2000 set aside the above said direction of the Commissioner and remanded the matter to him to pass an order in writing after considering the submissions of the appellants on affording them a reasonable opportunity of hearing.
2. On remand the Commissioner vide his Order dated 1-6-2001 has confirmed the demand of Rs. 2,89,600/- on the appellants under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A(1) of the Central Excise Act, 1944 in contravention of the provisions of Rule 49(1). This appeal is against the impugned order of the Commissioner. I have heard Shri P.K. Sahu, Advocate for the appellants and Shri R.C. Sankhla, JDR for the respondents. I have considered the submissions made before me. The Commissioner in his order has observed that the permission for destruction of expired medicines was granted to the party subject to the fulfilment of the conditions namely: if any Modvat had been availed, it should be debited in PLA and if any duty free import was involved with export obligation, the approval should be obtained from D.G.F.T. It is observed by the Commissioner that instead of reversing the Modvat credit availed by the party, they are contesting it taking umbrella of Board’s Circular No. 66/88-CX.6, dated 6-9-88 and the CEGAT order in the case of M/s. Inalsa Ltd. v. CCE -1997 (90) E.L.T. 417 (T). It is seen from the proceedings on record that the Commissioner had considered the case of the party for remission of duty under the provisions of Rule 49(1) and found them eligible for such remission. This was also communicated to them vide his office letter dated 26-7-99. Albeit, the permission was subject to the applicants reversing the Modvat credit gone into the manufacture of the goods in respect of which the remission of duty was sought. The matter was remanded to the Commissioner by the aforestated order of the CEGAT for passing a speaking order on affording a reasonable opportunity of personal hearing to the party. In this view of the matter, it was not open to him to consider the eligibility of the appellants to the remission of duty afresh. This issue had already been settled by him in favour of the party. As regards the reversal of the Modvat credit – it is observed that the Commissioner in his impugned order has held, “I therefore accept the plea of the party to allow the credit on the inputs utilised in the manufacture of final product keeping in view the Board’s directive mentioned above but simultaneously I am not inclined to accept that they are not required to pay the duty on the final product”. Thus, having already accepted the eligibility of the party to the remission of duty in his earlier order and having further
held that they are also eligible to avail the Modvat credit on the inputs utilised in the manufacture of final products in terms of the Board’s directive, there is no warrant to confirm of duty of Rs. 2,89,600/- on them. This confirmation of demand is therefore set aside and the appeal is allowed.