1987 (12) TMI 190 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility of Amegyl Suspension for exemption of central excise duty under Notification No. 116/69-C.E.
2. Whether the demand for duty raised by the Department was barred by limitation.

Issue-wise Detailed Analysis:

1. Eligibility for Exemption:

The primary issue was whether Amegyl Suspension, a product manufactured by the respondents, qualified for central excise duty exemption under Notification No. 116/69-C.E. dated 3-5-1969, as amended. The notification exempts Patent or Proprietary medicines falling under Central Excise Tariff Item 14E if they contain specified ingredients or pharmaceutical necessities that are therapeutically inert.

The respondents claimed exemption for Amegyl Suspension, which contained Metronidazole Benzoate and Di-Iodo Hydroxy Quinoline. The Assistant Collector held that Metronidazole Benzoate was not specified in the notification, and thus the product did not qualify for the exemption. The Collector (Appeals) overturned this decision, stating that Metronidazole Benzoate, despite not being explicitly mentioned, should not deprive the product of the exemption as it was used to make Metronidazole palatable without altering its therapeutic properties.

Upon review, it was determined that Metronidazole Benzoate and Metronidazole are chemically distinct, with different molecular formulas and weights. The Tribunal concluded that Metronidazole Benzoate is a substitute for Metronidazole but not the same, thus not qualifying for the exemption under Notification No. 116/69-C.E.

2. Limitation on Duty Demand:

The second issue was whether the demand for duty was barred by limitation. The Assistant Collector demanded duty for the period from 15.11.1979 to 29.10.1982 under Rule 9-B of the Central Excise Rules, 1914, claiming the classification lists were provisionally approved. The Collector (Appeals) limited the demand to six months, citing the absence of findings invoking the proviso to sub-section (1) of Section 11-A of the Central Excises and Salt Act, 1944.

The Tribunal examined the approval process of the classification lists and R.T. 12 returns. It was found that while some lists were approved "subject to chemical test," there was no evidence of actual chemical testing or provisional assessment formalities being followed. The Tribunal determined that the assessments were not provisional and thus, the demand for duty should be restricted to six months prior to the issue of the show cause notice, as per Section 11-A of the Central Excises and Salt Act, 1944.

Conclusion:

The Tribunal allowed the Revenue's appeal on the merits, concluding that Amegyl Suspension did not qualify for the exemption under Notification No. 116/69-C.E. However, it restricted the demand for duty to the period of six months prior to the issue of the show cause notice, as the longer limitation period was not applicable. The order of the Collector (Appeals) was thus partly set aside, and the appeal was partly allowed in these terms.