9911796707
TMI Blog1992 (10) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed in the appeal that the Lanolin that they manufacture has been conforming to the specifications of the Indian Pharmacopoeia (I.P.-1966) - a pharmacopoeial preparation, that is drug. But in the Classification Lists submitted by them from time to time they have not declared it as conforming to the I.P. The allegations against them in the show cause notice, dated 28-11-1985 issued under Rule 9(2) read with Section 11A of the Central Excises Salt Act, 1944 was that they had contravened the provisions of Rules 173B, 173C, 173F in as much as ; (a) they fraudulently suppressed material facts as to the nature, character and composition of the goods in their Classification Lists for the period 5-3-1979 to 3-4-1979 and 1-3-1983 to the date of issue of the show cause notice (b) wilfully mis-stated the said goods as non-excisable in the Classification Lists for the period 5-3-1979 to 3-4-1979 (c) wilfully and fraudulently did not file requisite Classification Lists for the said goods for the period from (i) 4-4-1979 to 27-2-1982, (ii) 28-2-1982 to 31-10-1982 and (iii) 1-11-1982 to 28-2-1983, with intent to avoid proper classification of the goods? under Rule 173B and due deter- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, dated 1-3-1978 had brought about the amendment). (b) C.L. No. 102/78, dated 4-3-1978 approved by the Assistant Collector. 5-3-1979 - C.L. 2/79 filed again declaring Lanolin Anhydrous as non-excisable in the category of other goods manufactured (C.L. filed because of increase in the rate of duty under Item 68 from 5% to 8%). 9-10-1979 - C.L. 2/79 approved by the Assistant Collector. 28-2-1982 - Notification 104/82-C.E. issued continuing the exemption to All drugs, medicines, pharmaceuticals and drug intermediates nes . 22-6-1982 - Notification 197/82-C.E. issued. The scope of exemption changed to All bulk drugs, medicines, and drug intermediates nes and following Explanation added In Serial No. 21, bulk drugs means any chemical or biological or plant product, conforming to pharmacopoeial standards used for the diagnosis, treatment, mitigation or prevention of disease in human beings or animals, and used as such or as an ingredient in any formulation . 1-11-1982 - Notification 234/82-C.E. issued without making any changes in the scope of exemption. 1-3-1983 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 1-11-1982, the appellants neither declared the goods as bulk drugs or medicines/drug intermediates nor did they declare the nature, character and composition thereof nor stated the specific serial number of the Schedule to Notification 234/82 for claiming exemption of duty. In view of these findings, he confirmed the demand for the period 1-11-1982 to 31-8- 1985 and also imposed a penalty of Rs. 25,000. While doing so, the learned Collector has arrived at a finding that the goods are used as medium/base in the pharmaceutical preparations and are not used as drug intermediates or bulk drugs or medicines by the actual users. In arriving at his finding the Collector has also taken into account the fact that the appellants did not declare the goods as conforming to the Indian Pharmacopoeia, a plea which they subsequently advanced before him. 5. In the appeal before us, the appellants have contested the correctness of the demand for a period beyond six months on the ground that there had been no suppression of any fact at any time whatsoever; that end use not being a condition for availing exemption granted to bulk drugs, the production of any end use certificate is fully unw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as finally assessed in view of the approval of the connected Form-1 and Price Lists submitted by them. In view of this letter, submitted Shri Biswas, there could be no demand for the period prior to August 1983. He also referred to a certificate dated 1st August 1986 issued by the Director General of Health Services certifying Lanolin Anhydrous - IP manufactured by the appellants to be a bulk drug eligible for exemption from duty under Notification 234/86, dated 3rd April 1986. 8. Shri Ram Prakash, the learned SDR submitted that with the insertion of the Explanation in the exemption notification by the amending notification 197/82, dated 22-6-1982, the scope of exemption had been defined and, since the appellants had at no stage in their classification list indicated that they were manufacturing Lanolin Anhydrous conforming to the Indian Pharmacopoeia, the goods were not eligible for exemption under any of the notifications particularly after the Explanation was added to the Notification. He referred to the decision of the Gujarat High Court in the case of Navsari Oil Products Limited v. Assistant Collector of Central Excise. [1992 (60) E.L.T. 550] and submitted that it was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period. If we look at Rule 173B, we find that sub-rule (4) thereof provides for filing of a fresh Classification List, if, in the approved Classification List any alteration becomes necessary because of a change in the rate of duty in respect of the goods or, by reason of any amendment to the Schedule to the Central Excise Tariff Act, 1985, a change in the chapter heading number, and sub-heading number becomes necessary. Although there is no specific mention in sub-rule (4) of the need for filing a fresh Classification List because of the issue of an exemption notification or its amendment, such a situation appears to be covered by the provision for filing a fresh Classification List because of the change in the rate of duty. Between March 1979 when the appellants had stated that Lanolin Anhydrous was non-excisable, and March 1983 when they claimed exemption under Notification 104/82 as amended by Notification 234/82, the appellants did not consider it necessary to file any Classification List. One could not have taken serious objection for failure to file a fresh Classification list if the exemption notifications were so clear as not to raise any doubt about the liability or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making of an order of assessment. Since approval of the list under Rule 173B is a step necessary for leading to the making of an order of assessment, this approval could be a subject of modification, while reopening the assessment under Section 11A. 11. Referring to the decision of the Supreme Court in the case of Jaishri Engineering (P) Ltd. v. Collector of Central Excise, Bombay. [1989 (40) E.L.T. 214], the Court observed in Paragraph 16 as under :- 16. ......illustrates that the content of the power under Section 11A includes a power to charge the Tariff Item applicable to the goods in question and, if wrong classification had been made earlier, due to mis-statement, fraud, etc. on the part of the assessee, the Revenue can invoke the proviso to Section 11A(1).....The case conclusively establishes that Section 11A vests a larger power in the authorities than the one stated by the petitioner in the instant case and that, while exercising the power under Section 11A, the authorities under the Act are not bound by the approval given to the Classification List earlier . 12. In view of the decisions cited by the learned SDR, it is dear that since the show cause notice was iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... animals, and used as such or as ingredient in any formulation". (Emphasis added) 14. A careful reading of the Explanation would show that the word used figures at two places. While at the first place, a view could be taken that the expression means normally used but such a meaning cannot be given at the second place where the words are .....and used as such or as ingredient in any formulation . The second place at which the requirement of use has been mentioned in the notification implies its use either as such or as an ingredient , and would signify actual use. Therefore, there is little scope for any doubt that after the insertion of the Explanation in the notification, it became necessary to ascertain that the bulk drug in respect of which the exemption was claimed was actually used either as such or as an ingredient in any formulation. As against the Collector s finding which is based on the test report of the goods that Lanolin Anhydrous was used as medium base in the pharmaceutical preparation and the evidence of its actual use by M/s. Himani Limited, the appellants did not place any evidence to controvert the allegation. It therefore follows that Lanolin Anhydrous w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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