2025-VIL-198-CESTAT-CHD-CE
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  2. 2025-VIL-198-CESTAT-CHD-CE

CENTRAL EXCISE CESTAT Cases

Central Excise - Refund of duty, Manufacture of life-saving drugs, Unjust enrichment – Appellant, manufacture of pharmaceutical products, procured bulk drugs, namely Gemcitabine Hydrochloride and Doxorubicin Hydrochloride, on payment of duty and used them as inputs in the manufacture of final products - Appellant claimed refund of the duty paid on these inputs under Section 11B of the Central Excise Act, 1944 - Whether the appellant is entitled to the exemption benefit under Notification No. 04/2006-CE dated 01.03.2006 for the hydrochlorides of Gemcitabine and Doxorubicin, even though these specific hydrochlorides are not listed in List 3 or List 4 of Notification No. 21/2002-Cus dated 01.03.2002 – HELD - The exemption benefit under Notification No. 04/2006-CE dated 01.03.2006 is applicable to the hydrochlorides of the drugs or medicines specified in List 3 or List 4 of Notification No. 21/2002-Cus dated 01.03.2002 – in the appellant's own case during the relevant period, the Commissioner had specifically held that the exemption under the Notification is extended to the hydrochlorides of the drugs or medicines specified, as this is in line with the legislative intent - Hydrochlorides are salts resulting from the reaction of hydrochloric acid with an organic base, and pharmaceutical substances are often prepared as hydrochlorides to enable quick release in the gastrointestinal tract. Restricting the exemption only to Gemcitabine and Doxorubicin, and not their hydrochlorides, would make the Notification redundant, which is not permissible under law – Further, denial of exemption to the appellant amount to discrimination because the other manufacturer who are manufacturing the identical goods are availing the exemption which has been sought to be denied to the appellant which is not permitted in law – The impugned order rejecting the refund on the basis of unjust enrichment is set aside and the appeal is allowed - Whether the appellant has established that the incidence of duty paid on the inputs has not been passed on to the customers, thereby satisfying the test of unjust enrichment – HELD - The appellant had provided sufficient documentary evidence to establish that the duty paid on the bulk drugs was borne by the appellant and not passed on to the customers. The appellant had recorded the duty paid as a "Receivable" under Current Assets in its balance sheet, and had also produced a Chartered Accountant's certificate demonstrating that the duty element was not included in the pricing of the final products - the invoices showed that the MRP of the products remained the same despite the payment of duty, further substantiating the appellant's claim. The Department had failed to bring on record any evidence to controvert the appellant's evidence and that a Chartered Accountant's certificate has evidentiary value and cannot be disregarded without valid reasons.
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