2007 (4) TMI 69 - AT - Central Excise

Exemption - Department contended that the appellant goods (Diabinese) not entitle for exemption in terms of Notification Nos. 122/86 and 9/94 - Held that department contention is not correct and the said good entitle for exemption

Summary

Issues:
1. Denial of benefit of exemption under Notification Nos. 122/86, 30/88, and 9/94 to a specific product.
2. Interpretation of the term "pharmaceutical necessities" and "therapeutically inert" under the notifications.
3. Contention regarding the addition of Calcium Carbonate to the product.
4. Allegations of interference with therapeutic activity.
5. Limitation period for issuing show cause notices.

Analysis:
1. The Commissioner confirmed a duty demand and imposed a penalty on the appellants for denying the benefit of exemption under specific notifications to a product called "Diabinese." The denial was based on the inclusion of Chlorpropamide and Calcium Carbonate in the product.

2. The dispute revolved around the interpretation of "pharmaceutical necessities" and "therapeutically inert" as per the notifications. The appellants argued that the addition of Calcium Carbonate in low dosages did not make the product therapeutically active. They relied on legal precedents to support their claim.

3. The appellants contended that the addition of Calcium Carbonate at low dosages did not render the product therapeutically active. They argued that the Commissioner failed to prove that the Calcium Carbonate interfered with the therapeutic activity of Chlorpropamide, the specified ingredient.

4. The Tribunal found that the Commissioner did not rebut the appellant's expert evidence regarding the dosage of Calcium Carbonate and its impact on the product's therapeutic activity. Since there was no evidence of interference with therapeutic activity, the impugned order was set aside.

5. Regarding the limitation period for issuing show cause notices, the Tribunal agreed with the appellants that the notices issued were time-barred. Issuing a notice based on known facts precluded alleging suppression later to extend the limitation period.

In conclusion, the Tribunal set aside the Commissioner's order, allowing the appeal based on the lack of evidence showing interference with therapeutic activity and the notices being beyond the limitation period.