Order date – 18 October 2022

 Facts –

• The Appellant, ALKEM LABORATORIES LTD., are engaged in manufacture and supply of PP medicaments under Ch.30 and availing input tax credit on Input and Input service. 
• As per the intelligence, the factory premises of the Appellant were searched by the officers of Hqrs. Preventive Section, Daman on 15.11.2018. During the course of said search and physical stock verification it was noticed that Appellant had procured raw material namely “Lanthanum Carbonate Octahydrate” without payment of duty availing the benefit of Notification 43/2001- CE(NT) dtd. 26.06.2001 
• Further, it was noticed that, Appellant wrongly availed Cenvat Credit on input and packing materials used in manufacturing of ‘Exhibit Batches’ which were subsequently destroyed/disposed of within the factory premises. It was also noticed by the officers that appellant illicitly cleared medicaments under cover of non-returnable challans without payment of duty and the same was accepted by Deputy General Manager (Account) of the Appellant
• Accordingly, a show cause notice was issued, in which the Adjudicating authority confirmed the demand of Central Excise duty and disallowed the wrongly availed and utilized Cenvat Credit and ordered to recover along with interest. 
• Since the Appellant had already paid the said duty amount, the same were appropriated against the demand; penalty was imposed under Section 11AC of the Central Excise Act, 1944; imposed redemption fine under Rule 25 of Central Excise Rules, 2002. 
• Aggrieved, Revenue has filed an appeal.

Issue – 

• Whether Cenvat credit availed by the appellant is in order ?

Order – 

• The Tribunal relied upon the decision of Shree Rajasthan Syntex Ltd., Shree Rajasthan Texchem Ltd and Ginger Clothing Pvt. Ltd. wherein it was held that the payment of duty on the goods procured under Notification 43/2001-CE (NT) by utilization form Cenvat credit for payment has been allowed. Therefore, following the said decisions the tribunal hold that the demand of duty can be paid by utilizing cenvat credit being no bar in law in this regard. 
• It is also find that there is no dispute in the facts that packaging/raw materials on which Appellant has claimed Cenvat credit has been used in process of manufacturing of medicaments for trial and testing purpose and quality purpose under the Drugs and Cosmetic Act, which was subsequently destroyed. On the basis of such testing/quality control process only the marketability of the product is ascertained and are used in or in relation to manufacturing of final products. 
• It find that pharmaceutical goods before being marketed should be sent for tests and sampling purpose in terms of the provisions of Drugs and Cosmetics Act, 1945. The medicaments cleared under the cover of non-returnable challans for testing and sampling purpose cannot be considered as manufactured goods as the same is not marketable in as much as the same has not attained any level of marketability as is clear from the facts that the same was sent outside the factory premises for testing and sampling purpose. Hence the Tribunal hold that, the samples cleared for testing and quality control test are not liable to any excise duty.
• Hence the impugned order is set aside and appeal is allowed.