1991 (3) TMI 142 - HC - Central Excise

Summary

Issues: Recognition of loan licensee manufacturer under the Central Excises & Salt Act, 1944; Application of Notification No. 71/78 and 80/80 for claiming exemption; Clubbing of clearances made by different manufacturers at the same factory premises.

Analysis:
1. The case involved a partnership firm engaged in manufacturing and selling medicines, with one partner manufacturing capsules and injectables and the other partner manufacturing tablets and syrup under a loan licensee arrangement. The issue arose when the excise department refused to recognize the loan licensee as a manufacturer for exemption purposes under Notification No. 71/78. The Superintendent of Central Excise clarified that clearances by the actual manufacturer, including those on behalf of the loan licensee, should be treated as his own. The petitioners sought relief from levying excise duty on goods manufactured by the loan licensee at the premises of the primary manufacturer.

2. The Court referred to a previous decision where it was established that loan licensees, under the Drugs and Cosmetics Act, could utilize other premises for manufacturing excisable goods and be considered manufacturers. The Court recognized the concept of a loan licensee manufacturer under the Central Excises & Salt Act, 1944, and emphasized the need to apply the Act, Rules, and notifications to such manufacturers accordingly. The petitioners were found not to satisfy the conditions of Notification No. 80/80 for claiming exemption, as there was no evidence of the aggregate value of clearances from the factory in question.

3. The prayer to restrain the department from clubbing clearances made by both manufacturers at the same premises was considered. The Court clarified that the concept of a loan licensee manufacturer was recognized under the Act, allowing the petitioners to be recognized as loan licensees for goods manufactured at each other's premises, subject to fulfilling all conditions. However, the prayer for exemption under Notification No. 80/80 was rejected due to the lack of material on record. The Court directed the petitioners to approach the excise department with relevant material to claim exemption, leaving the decision to the appropriate officer.

4. In conclusion, the petition was partly allowed, recognizing the petitioners as loan licensees for goods manufactured at each other's premises. The Court rejected the prayer for exemption due to insufficient evidence but allowed the petitioners to seek exemption by providing relevant material to the excise department. The interim relief granted earlier was vacated, and the rule was made absolute to the extent mentioned in the judgment.