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Issues:
Challenge to show cause notices for payment of excise duty on "acetic anhydride" supplied as a drug intermediate. Detailed Analysis: 1. The petitioner, a Public Limited Company engaged in manufacturing "acetic anhydride," challenged show cause notices issued by the Superintendent of Central Excise for payment of excise duty on the chemical supplied as a drug intermediate. The petitioner contended that the chemical was exempt from excise duty under a specific notification dated 1st March, 1978. 2. The petitioner argued that the interpretation by the Government in previous cases supported their claim for exemption. They cited cases of Hindustan Organic Chemicals Ltd. and Shasum Chemicals (Madras) Pvt. Ltd. where similar exemptions were granted by the Government. 3. The Revenue, represented by the Senior Standing Counsel, maintained that the petitioner could present their case before the Superintendent and exhaust available remedies before approaching the Court. However, the Court decided to examine the validity of the show cause notices to resolve the matter conclusively. 4. The Court emphasized that under the notification dated 1st March, 1978, all drugs, medicines, pharmaceuticals, and drug intermediates were exempt from excise duty. It clarified that the nature of the chemical, in this case, "acetic anhydride," was irrelevant if supplied as a drug intermediate to drug manufacturers. 5. Referring to the cases of Hindustan Organic Chemicals Ltd. and Shasum Chemicals (Madras) Pvt. Ltd., the Court highlighted that the interpretations by the Government in those cases were binding on the Superintendent. The Court also invoked the principle of contemporanea expositio to support the acceptance of the Government's interpretation. 6. Ultimately, the Court found the action of the Superintendent to be illegal and quashed the show cause notices. It prohibited the respondents from collecting excise duty on "acetic anhydride" supplied as a drug intermediate, in line with the exemption notification of 1st March, 1978. 7. The Court concluded by making the rule absolute, directing each party to bear their own costs in the case.
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