CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL MUMBAI WEST ZONAL BENCH CUSTOMS APPEAL NO: 89916 OF 2014 [Arising out of Order-in-Original No: Belapur/11/Bel-I/R-IV/COMMR/KA/ 2014- 15 dated 14, [order-in-original no. Belapur/11/Bel-I/R-IV/COMMR/KA/ 2014-15dated 14th August 2014] August 2014 passed by the Commissioner of Central Excise, Belapur.]

Sandoz Pvt Ltd Plot No.D-31/32 TTC Industrial Area, Turbhe Navi Mumbai – 400705 … Appellant versus Commissioner of Central Excise Belapur CGO Complex, CBD Belapur, Navi Mumbai – 400614 …Respondent APPEARANCE:

Shri Prakash Shah, Sr Advocate along with Shri Mohit Raval and Shri Ananta Khandait, Advocates, Advocate for the appellant Shri Badhe Piyush, Deputy Commissioner (AR) for the respondent CORAM:

HON’BLE MR C J MATHEW, MEMBER (TECHNICAL) HON’BLE MR AJAY SHARMA, MEMBER (JUDICIAL)

FINAL ORDER NO: 85900/2025 DATE OF HEARING: 12/12/2024 DATE OF DECISION: 05/06/2025 PER: C J MATHEW Though the impugned order¹ of Commissioner of Central

Excise, Belapur has directed recovery of ₹ 57,53,198, being the duty foregone on ‘packing material’ and ‘other inputs’ procured for manufacture of ‘cephalosporins’ and ‘carbapenems’, by enforcement of bond executed by them to qualify for entitlement of benefit of notification, [no. 52/2003 dated 31st March 2003] and confirmed demand of ₹ 17,86,024, as duty not paid on ‘spent/solvent’ between April 2007 to March 2012 cleared on payment of only basic duty of customs (BCD) into ‘domestic tariff area (DTA)’, while dropping demand for ₹ 1,10,68,334, as duty on manufactured goods that had to be destroyed owing to shelf-life prescriptions, and also demand of ₹ 97,504, as duty foregone on ‘data loggers’ imported by them, the dispute before us is limited to ‘inputs’ and ‘packing material’ allegedly procured in excess of requirement and having to be destroyed thereafter.

2. According to Learned Counsel for the appellant, the duty liability on ‘spent/solvent’, arising during manufacture of pharmaceutical products, was liable to duty in accordance with section 3 of Central Excise Act, 1944 and, in acknowledgement thereof, had discharged duty liability before issue of notice. It was also submitted that the components of demand that were dropped in adjudication has not been appealed against by the jurisdictional Commissioner of Customs and Central Excise.

3. Learned Counsel for the appellant submitted that they had procured certain ‘inputs’ and ‘packing material’ which, owing to the sensitive nature of their activity, could not be retained beyond the period prescribed in industry protocols. He argued that no liability on these goods arose as both the relevant notification, [no. 52/2003-Cus dated 31st March 2003] as well as section 3 of Central Excise Act, 1944, the statute governing goods manufactured in the unit, do not provide for recovery of duty on destroyed goods. It was submitted that duty liability has been fastened on destroyed goods in the impugned order without questioning the legitimacy of destruction and the allowance by the scheme in the Foreign Trade Policy (FTP) itself for destruction with remission of duty. In this connection, Learned Counsel also drew our attention, to ‘5.4: Request for granting of permission for destruction of raw materials, components, packing materials etc., without payment of duty though permissible under Foreign Trade Policy 2004-09 but not specifically covered in Customs Notification No. 52/2003 Cus dated 31.03.03; (Point sponsored by M/s Strides Arcolab Ltd.)

We are manufacturers and exporters of Pharmaceutical Products, having licence in 100% EOU. We are procuring raw materials and packing materials and we are exporting the finished product falling under chapter no. 30. As per drug rules, we are testing the raw materials, packing materials and finished products at all stages and it is also mandatory. During the process there is possibility of rejection either raw material, packing material or finished

product and the same will not be st