COMMISSIONER FOR EXCISE Vs. J L MORISON

JUDGEMENT

(1.) This writ appeal is by the Commissioner of Excise in Karnataka and two other officers of the Department against the order of the learned Single Judge quashing the demand made against the respondent for payment of an excise duty of Rs. 1,97,128-40, for the period commencing from 1 -4-1975 to 15-3-1976.

(2.) The facts of the case, in brief, are as under : The respondent is a company engaged in the manufacture and sale of medicines. Prior to April, 1975, one of the medicinal preparations manufactured by the respondent was local anaesthetic with alcohol as one of the ingredients. The medicinal preparations containing alcohol was one of the items on which the excise duty was leviable under the provisions of The Medicinal and Toilet Preparations (Excise Duties) Act, 1955, ('the Act' for short). Accordingly, the respondent was paying excise duty on local anaesthetics manufactured by it. On and after 25-11-1974, the respondent began to manufacture local anaesthetic without using alcohol. This fact was also intimated by the respondent to the appellants. In view of the omission of alcohol as one of the ingredients in the manufacture of local anaesthetics by the respondent, no excise duty was paid/levied on local anaesthetic manufactuted by the respondent on and after 25-11-1974. However, by letter dated 11-10-1977 (Exhibit-E), the third respondent demanded payment of excise duty amounting to Rs. 1,97, 128-00 on the ground that the respondent had failed to pay excise duty payable under the provisio'ns of the Act for the period commencing from 1-4-1975 to 15-3-1976. Aggrieved by the said demand, the respondent presented the writ petition.

(3.) The main contention of the respondent in the writ petition was that in the local anaesthetic manufactured by the respondent on and after 25-11 -1974, the alcohol was not being used and therefore no excise duty was leviable and further that the local anaesthetic manufactured by the respondent did not also contain any narcotic drug or narcotic and therefore the local anaesthetic manufactured by the respondent was not liable to excise duty under the Act. In the writ petition the respondent had set out the basis for urging the above contention.