1984 (8) TMI 336 - AT - Central Excise

Summary

Issues Involved:
1. Classification of Kemicetine Vaginal Suppositories (KVS) as parenteral or non-parenteral.
2. Eligibility for exemption under Notification No. 116/69-C.E.
3. Allegations of misstatement, suppression of facts, and fraudulence.
4. Time-bar for issuing demand notices.

Issue-wise Detailed Analysis:

1. Classification of Kemicetine Vaginal Suppositories (KVS) as Parenteral or Non-Parenteral:
The central issue revolves around whether KVS, containing chloramphenicol, should be classified as parenteral. The appellants argue that KVS is parenteral because it bypasses the alimentary canal, citing various medical dictionaries and authorities. They assert that systemic absorption qualifies KVS as parenteral. The central excise department, however, contends that parenteral administration must involve injection, and KVS, being a vaginal suppository, does not meet this criterion. The Tribunal concluded that KVS is not parenteral since it is primarily for local or topical use, and systemic absorption, if any, is incidental.

2. Eligibility for Exemption under Notification No. 116/69-C.E.:
The appellants claimed exemption under Notification No. 116/69-C.E., which applies to patent and proprietary medicines containing chloramphenicol for oral and parenteral use. The central excise department disputed this, arguing that KVS does not qualify as parenteral. The Tribunal agreed with the department, stating that KVS does not meet the criteria for parenteral administration and is not eligible for the exemption under the notification.

3. Allegations of Misstatement, Suppression of Facts, and Fraudulence:
The department alleged that M/s. Mac Laboratories had made false declarations and suppressed facts by classifying KVS as parenteral to avail of the exemption. The appellants countered that their classification was based on their understanding and that central excise had approved it for years. The Tribunal found no explicit evidence of fraudulence or suppression in the show cause notices or the Assistant Collector's order. It emphasized that any charges of misstatement or suppression must be explicitly proven, which was not done in this case.

4. Time-bar for Issuing Demand Notices:
The appellants argued that the demands were time-barred as they were issued beyond the six-month period stipulated under Rule 10 of the Central Excise Rules, 1944, and Section 11A of the Central Excises and Salt Act, 1944. The department invoked the extended five-year period, citing wilful misstatement and suppression of facts. The Tribunal found that the show cause notices did not explicitly charge the appellants with suppression or misstatement, nor did they invoke the extended period. Consequently, the Tribunal ruled that the demands for periods beyond six months were time-barred.

Conclusion:
The Tribunal concluded that KVS is not parenteral and does not qualify for the exemption under Notification No. 116/69-C.E. The demands issued by the Assistant Collector were deemed correct, but recovery was restricted to a period of six months before the date of the notices due to the time-bar issue. The appeal was rejected, and the appellants were directed to pay the duty as demanded within the stipulated period.