LUPIN LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners have challenged the legality and validity of the show cause notice dated 1.8.2001 issued by the Commissioner of Central Excise, Surat, respondent No.2 herein. In the said notice, the petitioners have been called upon to show cause why excise duty of Rs.28,01,63,832/ - with interest should not be recovered from them on the goods, that is, D2 Aminobutanol Tartrate falling under Chapter S.H. 2942.00 of the Central Excise Tariff Act, 1985, illicitly manufactured and removed for captive consumption for manufacture of Ethambutol HCL of Chapter S.H. 2942.00 during the period from 23.7.1996 to 31.03.2001. The facts are peculiar and may be noted in some detail.

(2.) The petitioner No.1 is a Company registered under the Companies Act and is engaged in the business of manufacture of pharmaceutical drugs. One such Anti T. B. Drug manufactured by the petitioner No.1 Company is Ethambutol Hydrochloride (hereinafter to be referred to as "the drug") falling under Chapter S.H. 2942.00 of the Central Excise Tariff Act, 1985. One of the inputs used by the petitioners in manufacture of such drug is D2 Aminobutanol Tartrate (hereinafter to be referred to as "the intermediate chemical"). Such intermediate chemical the petitioners manufactured in their own factories and used it for home consumption for production of the drug. The entire issue revolves around excisability of the intermediate chemical.

(3.) The Excise Department holding a belief that such intermediate chemical was exigible to excise duty, issued notice dated 14.12.1999 against the petitioners calling upon them to show cause why duty of excise at an appropriate rate should not be recovered from them on such intermediate chemical which according to the Department, was illicitly manufactured and removed for captive consumption during the period from 1.3.1986 to 26.2.1987. In such notice, the Department had set out the process undertaken by the petitioners for production of the drug with the use of the intermediate chemical. It was, therefore, contended that such intermediate chemical having been used for production of the final product, namely, the drug, and since the drug was exempt from payment of duty, the exemption notification No.217/1986 granting exemption to the input i.e. the intermediate product for home consumption, would not be available. The notice further referred to statements of the officers and employees of the petitioner No.1 Company to allege that there was illicit removal of the goods for home consumption and that, therefore, extended period of limitation for recovery of unpaid duty would be available.