1. In these two appeals, filed by M/s. Dolphin Laboratories Ltd., the issue involved is whether they are the manufactures of Gesdyp and Dolamide or M/s. Ranbaxy Laboratories Ltd. 2. Shri B.L. Narasimhan, learned Advocate, mentioned that the Appellants manufacture Patent or Proprietary Medicines by using their own raw materials; that they also act as job worker for M/s. Ranbaxy Laboratories Ltd. (M/s. Ranbaxy in short) under an Agreement; that M/s.
Ranbaxy supply the necessary raw materials for the manufacture of medicines; that they clear these medicines on payment of Central Excise duty on the principles of valuation laid down by the Supreme Court in Ujagar Prints v. UOI - 1989 (39) E.L.T. 493 (S.C.) and 1988 (38) E.L.T.535 (S.C); that the Department has confirmed the demand of duty of Excise and imposed penalty on the ground that M/s. Ranbaxy are loan licensees and thus are the manufacturers of the impugned goods as they get the impugned goods manufactured under their own control or supervision and out of their own raw materials and accordingly the duty is payable on the basis of price at which the goods are sold by M/s.
Ranbaxy from their depot in terms of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
3. The learned Advocate submitted that in the Order-in-Original the Deputy Commissioner has held that M/s. Ranbaxy are the manufacturers of the impugned goods and the Appellants are manufacturing the goods on behalf of M/s. Ranbaxy under a loan-licence agreement and that the movement of goods from the factory owned by M/s. Dolphin Laboratories to the Depot M/s. Ranbaxy is simply a stock transfer from a factory to a depot and is not sale of goods and the goods in fact are sold from the Depot of M/s. Ranbaxy only. The learned Advocate contended that if according to the Department, M/s. Ranbaxy Laboratories Ltd. are the manufacturers of the goods in question, duty of excise has to be demanded from them (M/s. Ranbaxy) and not from the Appellants; that even no show cause notice has been issued by the Revenue to M/s.
Ranbaxy for demanding the duty; that no duty liability can be fastened on the appellants as they are not manufacturers of the goods according to the Department. The learned Advocate, further, submitted that the agreement between M/s. Ranbaxy and the Appellants is on principal to principal basis; that none of the terms and conditions of the Agreement even remotely suggests that Ranbaxy exercises any type of control or supervision over the Appellants; that in fact the show cause notice does not make any such averment of control and supervision by M/s.
Ranbaxy; that thus they should be treated only as a job-worker and the transaction between them cannot be given any different colour; that the decision in the case of Indica Laboratories Pvt. Ltd. v. UOI -1990 (50) E.L.T. 210 (Guj) is not applicable, the loan licensee was exercising supervision and control over the manufacture and manufacturer had simply given his facility for the manufacture of goods. The learned Advocate relied upon the following decisions : (a) Mayo India Ltd. v. CCE - 1999 (113) E.L.T. 1036 wherein the Tribunal has held that in absence of evidence of supervision and control over manufacture of goods, the job worker is the actual manufacturer and not the assessee.Tara Industries Ltd. v. CCE, Chandigarh - 2003 (161) E.L.T. 758 (T) = 2003 (57) RLT 623 (CESTAT) He submitted that the valuation of the goods has to be determined on the principles laid down by the Supreme Court in the case of Ujagar Prints and not on the basis of the selling price of Ranbaxy; that Rule 7 of the Central Excise Valuation Rules is not applicable since the said Rule is applicable only when the goods are not sold by the assessee at the time and place of the removal but are transferred to a Depot; that in the present matters, it is not the case of the Department that sale is effected by the Appellants from Depot which is a sine qua non for the application of Rule 7.
4. We also heard Shri R.C. Shankhla, learned SDR who supported the findings as contained in the impugned Order.
5. We have considered the submissions of both the sides. The Central Excise duty is levied and collected on the excisable goods manufactured or produced in India. The Central Excise duty is payable at the time of removal of the goods by every person who produces or manufactures any excisable goods as per the provisions of Rule 4 of the Central Excise Rules, 2001 and Central Excise Rules, 2002. A specific finding has been given by the Deputy Commissioner who has originally adjudicated the matters that "in the instant case M/s. Ranbaxy Laboratories is the manufacturers and M/s. Dolphin is manufacturing the goods on behalf of M/s. Ranbaxy Laboratories under a loan licence agreement." This is further confirmed from fact that the department has invoked the provisions of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 which is applicable only where the (i) excisable goods are not sold by the assessee at the time and place of removal, (ii) excisable goods are transferred to a depot, premises of a consignment agent or any other place or premises from where the goods are to be sold, (iii) where the assessee and the buyer are not related and (iv) the price is the sole consideration for the sale. It is not in dispute that the depot belongs to M/s. Ranbaxy. Once the Revenue is regarding M/s. Ranbaxy as the manufacturer of the impugned goods, they have become assessee and any liability to discharge the duty rests on them and not on the Appellants. The Revenue cannot hold M/s. Ranbaxy as manufacturer of the goods and then demand duty from the Appellants. On this count itself the impugned order is not sustainable.
6.1 We also agree with the learned Advocate that the Revenue has not brought on record any material to show that M/s. Ranbaxy were supervising and controlling the manufacture in the premises of the Appellants. The provision in Agreement is to make available all facilities to Ranbaxy to inspect, audit and take samples for the purpose of analysis and to ascertain the quality and other specification of the Medicines does not make M/s. Ranbaxy as a manufacturer. On the other had the Agreement makes it clear that for the failure of batches, the Appellants would be liable to pay the cost of all inputs, raw materials and packing material. This clearly goes to show that the Appellants are manufacturing the goods independently and not under the control and supervision of M/s. Ranbaxy. In similar facts in the case of Mayo India Ltd., supra, where the Appellants were getting manufactured the medicines as loan licensee out of raw materials supplied by them as per their specifications requirement and bearing their trade mark and brand name, the Tribunal has held that the terms and conditions of the agreement reveal that the transactions between the Appellants and the manufacturers of the medicines was on principal to principal basis and that "the question whether the producer is or is not the owner of goods is not determinative of the liability" and "it is now well settled law that job worker using his own machinery and labour force and not supplier of raw material is to be considered manufacturer of goods." As the appellants are manufacturing the impugned goods on job work, the assessable value has to be determined for the purpose of levy and collection of duty on the basis of principles laid down by the Supreme Court in the case of Ujagar Prints, 1989 (39) E.L.T. 493 (S.C.). It is not the case of Revenue that the value has not been ascertained by the Appellants accordingly. The Tribunal has also held in many cases, such as Tara Industries Ltd. v. CCE - 2003 (161) E.L.T. 758 (T) = 2003 (57) RLT 623 that "goods produced on job work basis are required to be valued according to the rule laid down by the Apex Court's judgment in the case of Ujagar Prints Ltd." The Tribunal in the said decision has also referred to Board's Circular No.-619/10/2002-CX, dated 19-2-2002 wherein it was clarified that under the new Valuation provisions, there is no departure from the principles laid down by the Apex Court in Ujagar Prints and Pawan Biscuit Co. P. Ltd. - 2000 (120) E.L.T. 24 (S.C.). The Board further clarified that :- "In other words, after 1-7-2000, in respect of goods manufactured on job work basis Valuation would be governed by Rule 11 of the new Valuation Rules of 2000 read with Rule 6 read with the above two decisions of the Apex Court." 6.2 Similarly in Pharmasia Ltd. case, supra, who were manufacturing medicine 'Ultra Clearsil Acne Treatment with Benzoyl Peroxide', out of the raw material supplied along with packing materials supplied by M/s.
Procter & Gamble India Ltd., the Tribunal did not accept the Revenue's case that the assessable value should be fixed on the basis of the price charged by M/s. Procter & Gamble holding that the decision in the case of Ujagar Prints v. UOI -1989 (39) E.L.T. 493 (S.C.) applies. We, therefore, set aside the impugned Order and allow both the appeals.