AAREX LABORATORIES Vs. UNION OF INDIA

JUDGEMENT

(1.) PETITIONER No. 1 is a partnership firm and is engaged in the business of manufacturing and selling patent proprietary medicines. It is manufacturing capsule and injectable products. The petitioner does not have the facilities of manufacturing tablets and syrup. Therefore, it entered into an arrangement with petitioner No. 2 Gujarat Pharmaceuticals and Chemicals Works, partnership firm for manufacture of tablets and syrup. Similarly petitioner No. 2 has entered into an arrangement for manufacturing of certain drugs at the factory premises of petitioner No. 1. It appears that petitioner No. 2 requested the officers of excise department to recognise it as loan licensee manufacturer in respect of certain drugs got manufactured by it at the factory premises of petitioner No. 1. The Superintendent of Central Excise, Assessment Range -II, Division III, Ahmedabad wrote a letter dated May 2, 1980 and informed that the loan licensee cannot be treated as manufacturer and the actual manufacturer should be treated as the manufacturer in respect of the goods manufactured by him whether on his own account or on behalf of the loan licensee. Therefore all clearances by him including those on behalf of loan licensee are to be treated as his clearances accordingly and no loan licensee can be considered eligible for the benefit under Notification No. 71/78 dated March 1, 1978.

(2.) IT may be noted that by Notification No. 71/78, dated March 1, 1978, certain exemptions were granted to the manufacturers if they fulfilled the conditions laid down therein. Thereafter another letter dated August 5, 1980 has been written to petitioner No. 2 by the Superintendent of Central Excise and informed petitioner No. 2 that the value of clearances effected by it was exceeding the exemption limit. However, petitioner No. 2 claimed to pay duty under protest. Therefore, it was requested to clarify on what ground request for payment of duty under protest was made. Petitioner No. 2 was also informed that as per Notification No. 80/80, the goods manufactured and cleared by petitioner No. 1, M/s. Aarex Laboratories would be considered in the clearance value of M/s. Aarex Laboratories. Thereafter initially petitioner No. 1 has filed this petition on November 24, 1980 praying that the respondents be restrained from levying and collecting duty of excise in respect of the goods manufactured by M/s. Gujarat Pharmaceuticals and Chemicals Works, Ahmedabad, [now petitioner No. 2 herein], as a loan licencee at the premises of petitioner No. 1 in the total clearance effected by petitioner No. 1 for the purpose of exemption notification. It may be noted that after filing the petition, petitioner No. 2 has been joined as party. It is also prayed that the respondents be restrained from levying and collecting duty of excise in respect of the goods manufactured and cleared from the factory of petitioner No. 2 for and on behalf of petitioner No. 1 as loan licencee in respect of the first clearance made upto an aggregate value not exceeding Rs. 5 lakhs.

(3.) THERE is no material on record to show that petitioner Nos. 1 and 2 are satisfying the conditions of Notification No. 80/80 dated June 19, 1980, for claiming exemption in respect of either total clearance effected by the petitioners or in respect of first clearance made upto the aggregate value not exceeding Rs. 5 lakhs. In view of the absence of material on record, the prayer made in para 37(b) of the petition cannot be granted. In para 37(b), the prayer is that the respondents be restrained from levying and collecting duty of excise in respect of the goods manufactured at and cleared from the factory of petitioner No. 2 (M/s. Gujarat Pharmaceuticals and Chemicals Works) for and on behalf of petitioner No. 1 (Aarex Laboratories) as a loan licensee in respect of the first clearance made upto an aggregate value not exceeding Rs. 5 lakhs. One of the conditions of Notification No. 80/80, dated June 19, 1980 reads as follows : -