CITRIC INDIA LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) PETITIONER No. 1 is a Public Limited Company and on September 24, 1968 obtained a licence from Food and Drug Administration, Maharashtra, Bombay and commenced manufacture of pharmaceutical products, which are used in the drug formulations. One of the items manufactured by the petitioners is Citric Acid I. P. The Company filed classification lists from time to time classifying the product under Tariff Item No. 68 of the First Schedule of the Central excises and Salt Act, 1944, and the classification lists were duly approved by the Excise authorities. On March 1, 1975 the Central Government issued notification in exercise of powers conferred by sub- rule (1) of Rule 8 of Central Excise Rules, 1944 exempting goods of the description specified in the Schedule annexed to the notification and falling under Item No. 68 of the First Schedule from the whole of the duty of excise leviable thereon. this Notification No. 55 of 1975 was amended on March, 1978 by Notification No. 62 of 1978 and certain additional items were introduced in the Schedule. Item No. 9 reads as follows : "19. All drugs medicines, pharmaceuticals and drug intermediates not elsewhere specified".

(2.) THE petitioners claimed that Citric Acid I. P. was manufactured strictly in accordance with the standards prescribed under the Indian Pharmacopoeia and was manufactured in terms of the drug Licence. The petitioners filed fresh classification list on March 4, 1978 claiming benefit of exemption notification. On May 3, 1978 the Superintendent of Central Excise, Nasik approved the classification list confirming that the Company is entitled to the exemption under the notification.

(3.) BETWEEN January 1, 1979 and April 24, 1981 the Company was served with eleven show cause notices by Superintendent of Central Excise, Nasik, calling upon to explain why the claim for exemption should not be rejected and excise duty levied on citric acid under Tariff Item No. 68. In answer to the notices, the Company claimed that Citric Acid is item and in terms of provisions of Notification No. 62/78 excise duty cannot be levied on a drug item. On September 29, 1991 the Assistant Collector discharged the show cause notices holding that Citric Acid is a drug item eligible for exemption under Notification No. 62/78.