1992 (7) TMI 68 - HC - Central Excise

Medicaments - Ayurvedic - Statutory definition lacking - Interpretation of taxing statute - Writ jurisdiction

Issues Involved:
1. Jurisdiction and legality of the show cause notices.
2. Classification of the product 'SWAD' as Ayurvedic medicine or confectionery.
3. Applicability of Section 11A of the Central Excise Act regarding the recovery of duty.
4. Allegations of suppression and misstatement of facts by the petitioners.
5. Tenability of the writ petition in the presence of an alternative remedy.

Detailed Analysis:

1. Jurisdiction and Legality of the Show Cause Notices:
The petitioners challenged the show cause notices issued by the Central Excise authorities under Articles 226 and 227 of the Constitution of India, arguing that the notices were without jurisdiction and barred by limitation. The classification list for 'SWAD' tablets was provisionally approved and later finalized by the Assistant Collector, Central Excise. The petitioners contended that without modifying the classification list, the show cause notice for recovery under Sections 11A and 173B of the Central Excise Act and Rules was illegal. The court held that the classification list, once approved, could not be reviewed or modified without following the due process, and any recovery notice issued without such modification was without jurisdiction.

2. Classification of the Product 'SWAD' as Ayurvedic Medicine or Confectionery:
The primary issue was whether 'SWAD' tablets should be classified under sub-heading 3003.30 as Ayurvedic medicine or under sub-heading 1704.90 as sugar confectionery. The petitioners argued that 'SWAD' tablets were Ayurvedic preparations, supported by the ingredients mentioned in authoritative Ayurvedic texts and approved by the Drug Controller of M.P. The Central Excise authorities contended that the high glucose content and the presence of liquid glucose, an allopathic ingredient, disqualified 'SWAD' from being classified as Ayurvedic medicine. The court examined expert opinions, the approval by the Drug Controller, and the Ayurvedic texts, concluding that 'SWAD' retained its Ayurvedic characteristics despite the glucose content, and thus, should be classified as an Ayurvedic preparation.

3. Applicability of Section 11A of the Central Excise Act Regarding the Recovery of Duty:
The show cause notice under Section 11A of the Central Excise Act sought to recover duty on the grounds that 'SWAD' tablets were misclassified. The petitioners argued that Section 11A applies to recovery of duty not paid or short-paid due to misclassification, which can only be done prospectively after modifying the classification list. The court agreed, stating that the recovery of duty could not be retrospective and must follow the modification of the classification list.

4. Allegations of Suppression and Misstatement of Facts by the Petitioners:
The Central Excise authorities alleged that the petitioners suppressed facts about the glucose content and misrepresented the weight of the tablets to evade duty. The petitioners refuted these allegations, providing evidence of full disclosure and compliance with regulatory requirements. The court found no evidence of suppression or misstatement, noting that the classification was based on the license issued by the Drug Controller, who had conducted an inquiry and confirmed the Ayurvedic nature of 'SWAD' tablets.

5. Tenability of the Writ Petition in the Presence of an Alternative Remedy:
The Central Excise authorities argued that the writ petition was not tenable due to the availability of an alternative remedy by way of appeal. The petitioners cited Supreme Court judgments asserting that an alternative remedy does not bar the maintainability of a writ petition if the authority acted without jurisdiction. The court held that the show cause notices were without jurisdiction and thus, the writ petition was maintainable.

Conclusion:
The court quashed the show cause notices, concluding that 'SWAD' tablets were Ayurvedic preparations, the notices were issued without jurisdiction, and there was no suppression or misstatement of facts by the petitioners. The classification list approved by the Assistant Collector under Item 3003.30 of the Central Excise Tariff was upheld. The extended period of limitation under Section 11A was not applicable, and the writ petitions were allowed.

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