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TMI Blog1986 (6) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... e of medicines. Prior to April, 1975, one of the medicinal preparations manufactured by the respondent was local anaesthetic with alcohol as one of the ingredients. The medicinal preparations containing alcohol was one of the items on which the excise duty was leviable under the provisions of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, ('the Act' for short). Accordingly, the respondent was paying excise duty on local anaesthetics manufactured by it. On and after 25-11-1974, the respondent began to manufacture local 'anaesthetic without using alcohol. This fact was also intimated by the respondent to the appellants. In view of the omission of alcohol as one of the ingredients in the manufacture of local anaesthetics by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al anaesthetic products manufactured by the respondent. The said entry at that point of time read as under : "ItemNo. Description of dutiable goods Duty. Rate of XXX XXX XXX (iii) Medicinal preparations not containing alcohol but containing opium, Indian hemp or other narcotic drug or narcotic Ten per cent ad valorem." (underlined by us) The above contention of the appellants was negatived by the learned Single Judge. In doing so, the learned Single Judge relied on a judgment of the Gujarat High Court in the case of Suhrid Giegy Ltd. v. Union of India [1980 Excise Law Times 538 (Guj.)]. The learned Single Judge held that the local Aneasthetic manufactured by the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sensibility in human beings, the ingredient of the medicinal preparation must be held to contain a narcotic drug or narcotic for, without any such ingredient, it would be no anaesthetic at all. Therefore, the respondent was clearly liable to pay excise duty even though the respondent was not using alcohol in manufacturing the local anaesthetic on and after 25-11-1974. Hence the demand for payment of excise duty made by the third appellant was in accordance with law. 6. As against the above submission, learned Counsel for the respondent submitted as follows : (i) Item No. 1(iii) in the schedule to the Act and Entry 14E of The Central Excises and Salt Act, 1944, are mutually exclusive. Entry 14E in the schedule to the Central Excises and Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (ii) Further, the action initiated by the third appellant was barred by time and it was initiated after six months from the date on which, according to the appellant, the duty was payable, as it was a case of short recovery of duties by the appellants, even on the basis that the stand taken by the appellants was correct. Learned Counsel for the respondent also submitted that having regard to the nature of the duty, the same has got to be collected before the goods are removed and sold and therefore it was only in cases where on account of the misconduct by the manufacturer the excise duty payable was not paid, action could be taken against the manufacturer, but in all cases where the authorities themselves considered or conceded that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such refund has been erroneously made, shall pay the deficiency or repay the amount paid to him in excess, as the case may be, on written demand by the proper officer being made within six months from the date on which the duty or charge was paid or adjusted in the owner's account current if any or from the date of making the refund. xxx xxx xxx 9. Time and manner of payment of duty : (2) If any dutiable goods are, in contravention of sub-rule (1) deposited in or removed from, any place specified therein the manufacturer thereof shall pay the duty leviable on such goods upon written demand made by the proper officer, whether such demand is delivered personally to him or is left at the manufactory or his dwelling house and he shall also be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the respondent that as the respondent had ceased to use alcohol in the manufacture of local anaesthetic, the local anaesthetics manufactured by the respondent were not subject to excise duty under the Act, and as they were taking a different view and such administrative decision and consequent action on the part of the appellants was resulting in serious civil consequences to the respondent, in that, a liability to the tune of 2 lakhs of rupees was being cast on the respondent, a final notice for payment could not have been issued by the third respondent unless the grounds on which the said liability was sought to be fixed on the respondent, were made known to the respondent and the respondent was given an opportunity of having its say i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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