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TMI Blog2011 (8) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... 000-CE, dated 29.9.2000 and Notification No. 51/2000-Central Excise, dated 9.10.2010, all "intravenous fluids" were exempted exciseable goods, meaning thereby that the same were exempted from excise duty. As per the explanatory note to the Finance Bill of 2001, the Central Government felt that a clarificatory change was required and accordingly Notification No. 3/2001-CE dated 1.3.2001 (Annexure A-2) was issued and exemption on excise duty was limited to intravenous fluids, which were used for sugar, electrolyte or fluid replenishment, thereby restricting the scope of intravenous fluids. In pursuance of that notification, the respondent-Department issued a show cause notice dated 29.10.2002 (Annexure A-3), proposing a demand of Rs. 18,12,240/- from the appellant under Section 11-A of the Act. In reply to that show cause, it was submitted by the appellant that it was entitled to exemption and that proposal to levy duty interest and penalty was untenable. The Central Excise Commissionerate, Panchkula, upheld and confirmed the demand raised by the Department, vide order dated 5.8.2003 (Annexure A-4). The appellant preferred statutory first appeal to the Tribunal, vide memorandum dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted the contentions of the Department and dismissed the appeal. Vide that order, the appeals of the other assessees were also decided and some of them challenged that order before the Madhya Pradesh High Court, Indore Bench and the matter is still pending for consideration. 3. In the appeal, the appellant challenged the impugned order, on the following grounds:- (i) The conclusion of the Tribunal that the properties of intravenous fluids inasmuch as they contained antibiotics and other medicaments were the factor relevant for the purpose of determining the entry in the exemption notification is not supportable from the other notification itself. The emphasis of the legislature is on the use/intended use of the intravenous fluids, which is primary factor to be taken into consideration for interpreting the exemption clause. It is adequately evident from the scientific and technical data that the products manufactured by it are usually put to one of the three uses i.e. sugar, electrolyte or fluid replenishment. The exemption notification being exception to the fiscal law must be interpreted strictly, having regard to the language employed therein. (ii) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Tribunal, learned counsel for the appellant made three-fold submissions. He submitted that Hon'ble the Supreme Court, while remanding the case, vide order dated 31.3.2009, categorically observed that if the Tribunal felt that it required further evidence, it may either itself decide that point after giving opportunity to the parties or it may remit the matter to the adjudicating authority for a fresh decision on factual aspect in accordance with law. The appellant moved an application for additional evidence for proving that merely labelling of fluid as Schedule 'H' will not make any difference for its use as sugar, electrolyte or fluid replenishment. That application was disallowed without recording any reason. Had an opportunity been given to lead that evidence, the appellant would have successfully proved that its product was exempted from excise duty. He further argued that medicament of the intravenous fluids, by adding items such as antibiotic etc. and labelling the same as Schedule 'H' drug, as per mandatory provisions of 1945 Act, will not change the dominant purpose of use for sugar, electrolyte or fluid replenishment. Without deeply going into that question, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule-H drug. We do wish to express any opinion on this point. Suffice it to state that on the above two questions/issues, the matter needs to be remitted to the Tribunal for consideration in accordance with law. We may add that exemption notifications have to be read strictly. We may also add that the burden is on the assessee to prove that the item falls within the four corners of the exemption notification. Before concluding, we may state that if on the second issue, regarding Schedule-H Drug, as spelt out hereinabove, if the Tribunal feels that the matter requires further evidence, it may either itself decide that point after giving opportunity to the parties or it may remit the matter to the Adjudicating Authority for its decision on factual aspect in accordance with law. Subject to what is stated above, the Department's Appeals are allowed, the impugned judgment is set aside and the matters are remitted to the Tribunal for fresh consideration in accordance with law. In the facts and circumstances, there will be no order as to costs." 7. Thus, the matter was remitted to the Tribunal for deciding the following two questions/issues:- (i). What is the ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification in question and the relevant provisions of 1945 Act. The exemption from excise duty was in respect of intravenous fluids, which are used for sugar, electrolyte or fluid replenishment. What is the effect of the addition of any of the above said items ? Once, any of those items is added in the intravenous fluids, it becomes schedule 'H' drug, as per the provisions of the 1945 Act and statutory warning is to be inscribed thereon. Addition of those items not only change the medicaments value of the intravenous fluids but it is also a factor for increasing the price on the ground that it is schedule 'H' drug. Under the previous notification, all intravenous fluids were exempted from excise duty but by way of notification dated 1.3.2001, a condition was imposed and it specifically speaks of intravenous fluids, which is used for sugar, electrolyte or fluid replenishment. The medicaments of intravenous fluid will certainly make the use thereof for a particular disease, for eradication of which any of the said items is to be administered. The spirit of the notification appears to be that only those intravenous fluids are exempted from excise duty which are exclusively used for s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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