9911796707
TMI Blog1993 (10) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Superintendent of Central Excise it was alleged that they had cleared for captive consumption Salicylic Acid Technical Grade and Parahydroxy Benzoic Acid falling under Chapter 29 of the Central Excise Tariff without payment of Central Excise duty. They were, therefore, asked to show cause as to why duties amounting to Rs. 53,122.22 on Benzoic Acid weighing 5418 kgs. and Rs. 1,79,030.63 on 31270 kgs. of Salicylic Acid Technical Grade cleared during the period 1-3-1986 to 31-3-1986 should not be recovered under Section 11A. Two more similar show cause notices dated 30-9-1986 and 4-12-1986 demanding duty amounting to Rs. 9,46,417.41 and Rs. 1,71,993.53 were issued by the Superintendent demanding duty on the two products cleared by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the certificate from the Drugs Controller since in respect of intermediate products meant for captive consumption, there could be no requirement of the Drugs Controller s certificate. The learned counsel submitted that his alternative plea was that prior to the amendment of Note 2(i)(b) if Chapter 30 of the Central Excise Tariff Act, 1985 on 13-5-1986 in terms of the Finance Act, of 1986 the Salicylic Acid in question was classifiable as Medicament under sub-heading 3003.20. He submitted that since the expression Put up in measured doses or in packings for retail sale or for use in hospitals can be deemed to have been added to clause (b) of Note 2 (i) of Chapter 30 only on enactment of the Finance Bill on 13-5-1986, prior to that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sub-heading 3003.20. 4. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that in respect of Salicylic Acid Technical grade and Parahydroxy Benzoic Acid produced as intermediate products in the appellants factory only the following points arise for consideration :- (1) Whether they were eligible for exemption in terms of Notification No. 234/86? (ii) Whether during the period prior to 13-5-1986 they could be deemed as medicaments falling under sub-heading 3003.20? 5. For the consideration of the first point we refer to Notification No. 234/86 which is reproduced below :- BULK DRUGS In exercise of the powers conferred by sub-rule (1) of the Central Excise Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pharmacopoeial standards. We do not find any force in the contention of the learned counsel that the disputed items being intermediate products the requirement of a certificate from the Drugs Controller under the notification was not attracted. Since the products Salicylic Acid of Technical grade and Parahydroxy Benzoic Acid produced in the appellants factory were neither covered by the required certificate from the Drugs Controller of India, nor did they conform to any pharmacopoeial standards, we hold that they were not eligible for exemption under Notification No. 234/86. 6. The second point to be examined is whether during the period prior to the amendment of Note 2 of Chapter 30 Salicylic Acid of Technical grade was classifiable und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cleared by the appellants for captive consumption for the manufacture of Methyl Salicylate was classifiable under sub-heading 3003.20, since it was to be treated as a medicament in terms of Note 2(i) of Chapter 30 as it was worded at that time since it had therapeutic uses. In support of their claim that Salicylic Acid has therapeutic uses, he has relied on Merck Index in which it is listed at Serial No. 8093. 8. It is evident that the disputed Salicylic Acid of Technical grade being a single product, it could not be deemed as a product comprising of two or more products mixed or compounded together for therapeutic or prophylactic uses. Hence during the relevant period it would have qualified for assessment as medicament under sub-h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ug or medicine having therapeutic or prophylactic effect was ruled out. We find that the exact reason or authority on the basis of which they had arrived at this finding was not indicated by the lower authorities. Further, they also failed to examine whether there was any qualitative difference between the Salicylic Acid of Technical Grade meant for captive consumption which was claimed by the appellants as assessable under sub-heading 3003.20 as a medicament and the same product cleared by the appellants for sale in the market after paying duty under sub-heading 2907.90. 9. In view of the above discussion we are of the view that the impugned order suffers from non-application of mind. We, therefore, set aside the order appealed against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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