TMI Blog1990 (7) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... to the pharmacopoeial standards. They are bulk drugs and classifiable under residuary Item No. 29.24 of Chapter 29 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter called the Act) which came into force from 1-3-1986. 2. After the coming into force of the Act from 1-3-1986, the petitioners Company filed a classification list classifying the said products under the above Chapters and cleared the products after payment of duty of excise on removal of the said products at the rate of 15 per cent ad valorem. Thereafter by Notification dated 3-4-1986, the Central Government, in exercise of its powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 exempted bulk drugs falling under Chapter 28 or Chapter 29 of the Schedule to the Act from the whole of the duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944 on the terms and conditions mentioned therein. The Notification of the Govt. of India granting exemption reads as under : "In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excises Rules, 1944, the Central Government hereby exempts bulk drugs, falling under Chapter 28 or Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid order of refund having been passed, a notice was issued on 29-6-1987 to the petitioners by the Central Excise Authorities to show cause as to why the order earlier passed for refund be not quashed in view of the fact that the petitioners had suppressed facts; to which the petitioners filed a reply, but the Assistant Collector rejected the contention of the petitioners. The petitioners have already preferred an appeal to the Collector Central Excise (Appeals) against that order. According to the petitioners the said products are bulk drugs and they have been certified as bulk drugs by the Drugs Controller as goods classified for exemption under the said notification. The said products were removed from time to time with the approval and full knowledge of the officers of the respondent No. 1 without payment of any duty of excise and the petitioners have also not recovered any duty from its customers. As such they have not unjustly enriched them selves nor have they included any duty amount in their invoice prices. 4. Thereafter notices were served on the petitioners for furnishing certain information. An endorsement was also made in the classification list by the Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avention of any of the provisions of the Act or Rules made thereunder with intent to evade payment of duty. None of the aforesaid ingredients being present in the instant case the notice is without jurisdiction and should be quashed. 6. By way of amendment the petitioners have further clarified that some goods which were sent to Hindustan Lever Limited and Colgate Palmolive Limited who were obviously not engaged in the manufacture of pharmaceuticals but cigarettes, paints and paper etc. were clearly mentioned by the petitioners in gate passes which were checked and cleared by the authorities. Therefore, there is no case of suppression, mis-statement, fraud, collusion or violation of any law or Rules. It has also been averred that the impugned show cause notice has been issued on the basis that the petitioners have sold the products to those manufacturers also who do not manufacture medicines and pharmaceuticals alone. According to the petitioners the language of the Notification of exemption of the product from the excise duty nowhere lays down that the products should exclusively be used for medicines and pharmaceuticals. The words used are 'normal use of the product' and the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners have not given the certificates of end use of the products and, therefore, it is not possible for the respondents to know as to what use actually the products cleared from the factory are being put. The petitioners are withholding that information from the respondents, and are not furnishing a reply to the show cause notice and for want of the actual details about the end use the entire quantity cleared has been taken into account for the purposes of action under S.11A. Actually, previously refund was granted erroneously and the petitioners have wrongly availed the exemption under notification 234/86 and this has occasioned because of suppression of facts on behalf of the petitioners. It appears that the petitioners have collected the duty from the manufacturers. This itself shows that the petitioners are not certain about their stand about the goods being exempt from the levy of excise duty. The endorsement was made in view of the terms of the notification and if the party was aggrieved they should have gone long back in appeal against that order which they have not done. The exemption is not available for the non-pharma uses. 9. Thereafter by way of an affidavit the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to above. The refund was erroneously granted and that is why proceedings of recovery were initiated. It has also been pleaded that the petitioners have equally efficacious remedy available to them and they can avail of that remedy after the adjudication. The matter has not been adjudicated upon and an investigation may also be necessary after the reply of the petitioner. Therefore, it is in anticipation of a decision against them that the petitioners have filed this petition. It, therefore, should be dismissed. 11. The learned counsel for the petitioner Shri Sitalwad has mainly assailed the impugned notice on the ground that this notice is barred by limitation as the provisions of S. 11A of the Central Excises and Salt Act are not applicable to the facts of the present case as there is no suppression, mis-statement, fraud or collusion on the part of the petitioners. The Supreme Court has repeatedly held that unless the aforementioned mis-statement or suppression of fact etc. are not on the record, provisions of S. 11A of the Central Excises and Salt Act shall not be attracted. The second contention is that the notification does not prohibit the sale of the products in questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not available to the Revenue cited the following authorities (1) TISCO v. Union of India 1988 (35) E.L.T. 605; (2) Nat Steel v. Collector of Central Excise 1988 (34) E.L.T. 8; (3) Collector v. Kosen Metal Products Ltd. (1984 Excise and Customs Reports, 30). It has also been argued that the evasion is not intentional and if it is not intentional the provisions of S. 11A of the Excise Act are not attracted. Reliance has been placed on Tata Yodogawa v. Asstt. Collr. 1983 (12) E.L.T. 17. 14. In the case of Tata Iron Steel Co. Ltd. v. Union of India and Others (supra) the Supreme Court has held that when the appellant was filing classification lists containing the description of the items and showing them liable to the payment of excise duty only under Item 26AA(ia) and these lists were accepted and approved by the Excise Authority, it cannot be said that the appellant was guilty of any suppression or mis-statement of facts, fraud, collusion or contravention of provisions of Excise Act. In view of this the period of limitation would clearly be only six months and the extended period of five years is inapplicable. 15. In the case of Nat Steel Equipment Private Ltd. v. Collector of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 29 of the Schedule to the Act from the whole of the duty of excise leviable under S. 3 of the Central Excises and Salt Act, 1944 on the terms and conditions mentioned in the notification itself. The condition of exemption was that the manufacturer furnishes to the proper officer, a certificate from the Drugs Controller to the Government of India, within such period as the said officer may allow, to the effect that the drugs of chemicals which are claimed for exemption under this notification are the bulk drugs within the meaning of the bulk drugs given in the Explanation to this notification and are normally used for the diagnosis, treatment, mitigation or prevention of diseases in human beings or animals, and used as such or as an ingredient in any formulation. In the Explanation to the notification it has again been stated that the bulk drugs means any chemical or biological or plant product conforming to pharmacopoeial standards, normally used for the diagonsis, treatment, mitigation or prevention of disease in human beings or animals, and used as such or as ingredient in any formulation. Therefore, what was necessary for seeking the exemption was to obtain a certificate fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing cigarettes, cosmetics etc. As such there is a controversy about the interpretation of the words 'normally used' between the company and the Revenue. However, in the instant case the crucial point is whether the Company suppressed any facts or cleared the goods by misrepresentation, fraud or collusion. The facts placed before us which are not in dispute clearly show that the company initially paid the excise duty before the exemption notification. After the notification it again continued to pay the duty on the goods cleared by it till it obtained the necessary certificate from the Drug Controller to the Government of India. It was only when the Drugs Controller, Govt. of India gave a certificate to the effect that the products in question of the company are liable for exemption from excise duty under the notification of the Govt. of India exempting bulk drugs, then only the company cleared the goods without payment of excise duty. In the gate passes no suppression was made and clearly the names of the companies to which the consignments were to be delivered have also been mentioned. Therefore, if the company bona fide believed that their product is a product which is covered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly in view of the fact that this Court was not approached immediately after the endorsement by the petitioners and instead they cleared the goods on the aforesaid endorsement and secondly the decision of the question involves decision on question of fact, we refrain from passing any order on this issue. The petitioners are, however, free to approach the authorities for redressal of their grievance and we hope and expect that the authorities shall take a judicious view in the matter after considering all the facts and going through the documents which may be filed before the Authority. 22. In view of the aforesaid, the petition is partly allowed. The impugned notice dated 24th Feb. 88 issued under S. 11A of the Central Excises Salt Act, 1944 by the Collector, Central Excise Indore is quashed being without jurisdiction and beyond the period of limitation. The respondents and their agents, servants or officers are prohibited from in any way acting in furtherance of or in implementation of the show cause notice aforesaid and they are further prohibited from demanding any duty of excise in pursuance of the aforesaid notice. The prayer made by the petitioners in respect of the endors ..... X X X X Extracts X X X X X X X X Extracts X X X X
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