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2013 (6) TMI 31 - HC - Central ExciseValidity of Show Cause notice when the orders of CESTAT in operative - manufacturer of Intravenous Fluids - exemption vide notification no. 3/2001 - held that - As matter of the petitioner has not been decided till date in compliance of the order of the Apex Court and during the period when the order of Tribunal dated 27-2-2004 was operative, impugned show cause notices by which recovery was directed against the petitioner were totally untenable as at that time no recovery could have been directe. Show cause notices quashed - The Customs, Excise & Service Tax Appellate Tribunal, who has been directed by the Apex Court 2009 (3) TMI 55 - SUPREME COURT , shall decide the matter as per directions issued by the Apex Court.- If the matter is decided in favour of the petitioner then there would be no question of imposing of any excise duty against the petitioner. However, if the matter is decided against the petitioner, the department shall be free to issue fresh show cause notices. However, this action shall be subject to final adjudication of the dispute after the order passed by the Tribunal.
Issues:
1. Interpretation of exemption notification for excise duty on Intravenous Fluids. 2. Effect of amendments to exemption notifications on product classification. 3. Consideration of therapeutic value and Schedule-H drug classification. 4. Burden of proof on the assessee for exemption under notification. 5. Legality of show cause notices during the pendency of Tribunal's order. Issue 1 - Interpretation of Exemption Notification: The petitioner, a manufacturer of Intravenous Fluids, sought relief against show cause notices for excise duty between 2003-2009. The dispute centered on whether the product was exempt from excise duty under Notification No. 3/2001. The Tribunal initially ruled in favor of the petitioner, but the matter was appealed to the Supreme Court for clarification. Issue 2 - Effect of Amendments on Product Classification: The Supreme Court clarified that Intravenous Fluids exempted from duty were those used for sugar, electrolyte, or fluid replenishment as per Notification No. 3/2001. The addition of certain medicinal items to the fluids gave them therapeutic value, potentially excluding them from the exemption. The Tribunal was directed to reexamine the effect of the 2001-2002 Budget on the definition of IV Fluids and the Schedule-H drug classification. Issue 3 - Therapeutic Value and Drug Classification: The Tribunal was instructed to consider whether the addition of certain items to the fluids altered their classification as Schedule-H drugs. The Department argued that fluids with dominant therapeutic value should not be exempted. The Tribunal was tasked with evaluating this aspect in accordance with the law. Issue 4 - Burden of Proof for Exemption: The Court emphasized that exemption notifications must be strictly construed, and the burden of proof lies on the assessee to demonstrate compliance with the notification's requirements. Issue 5 - Legality of Show Cause Notices: The petitioner challenged show cause notices issued during the Tribunal's order period, arguing that no recovery could be demanded during that time. The Court quashed the notices, directing the Tribunal to decide the matter based on the Supreme Court's directions. The petitioner was not liable for excise duty if the Tribunal ruled in their favor, but fresh notices could be issued if the decision went against them. In conclusion, the Court upheld the petitioner's challenge against the show cause notices issued during the Tribunal's order period, emphasizing the need for a fresh adjudication based on the Supreme Court's directives.
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