PHARMA Vs. SUPERINTENDENT OF CENTRAL EXCISE

JUDGEMENT

(1.) The only question that arises for decision in this writ petition is whether "Essence of Chicken" is liable to Excise duty under Entry 1-B of the First Schedule of the Central Excises and Salt Act, 1944. The question is of considerable importance and I deem it desirable that the case is heard by a Bench of two judges. The papers shall, therefore, be placed before the Hon'ble the Chief Justice, for posting the case before a Bench. Pursuant to the above order, the petition came on for hearing before a Division Bench consisting of Divan, C. J. and Amareswari, J. U. L. V. Damodar Rao, for Petitioners. K. Subrahmanya Reddy, Standing Counsel for Central Government, on behalf of Respondents. The Judgment of the Bench was delivered by Divan, C. J.-This matter is placed before us on a reference made by our learned brother, Madhusudan Rao, J. He has referred the matter to a Division Bench because he felt that the question whether the essence of chicken is liable to excise duty under Entry 1-B of the First Schedule to the Central Excises and Salt Act, 1944 was of considerable importance and he deemed it desirable that the case should be decided by a Bench of two Judges.

(2.) The petitioners herein are manufacturers of essence of chicken. The first petitioner is a registered partnership firm carrying on the business of pharmaceutical works of manufacture and production of patented and proprietory medicines. The first petitionerfirm is the lessee of the second petitioner, and the business premises are owned by the second petitionercompany. The essence of chicken is produced or manufactured by the first petitioner besides other medicinal goods. The first petitioner is paying excise duties to the authorities under the Central Excises and Salt Act. Declaration of particulars of goods produced or manufactured and intended to be removed by the first petitioner with full particulars of the goods with Drug Schedule was submitted by the first petitioner to the Central Excise Authorities at Vijayawada and the same was verified and found correct by the Inspector on 30th November, 1971. Item 5 of the said declaration contained goods of 30 kinds of medicinal preparation of which item 12 was essence of chicken. At one stage the second respondent, i. e., the Assistant Collector of Central Excise, Vijayawada, passed an order that all the 30 items were a non-excisable. However, on 15th September, 1972 the first respondent f. e., the Superintendent of Central Excise, Vijayawada, intimated to the first petitioner that the essence of chicken was an extract of meat juice and that "Meat Extracts and Meat Juices" would come under the purview of tariff item No. 1-B of the First Schedule attached to the Central Excises and Salt Act, 1944, hereinafter referred to as the Act, as an item of prepared and preserved foods with affect from 1st March, 1969 and that the essence of chicken therefore attracted Central Excise Duty with effect from 1st March, 1969. Therefore, representations were made and ultimately, the petitioners have filed this writ petition for a declaration that the essence of chicken is not a product of meat and for declaring that the essence of chicken is not liable to levy of excise duty under item 1-B of the First Schedule to the Act. The petitioners have prayed that orders of Respondent 3, the Union of India confirming the levying of excice duty on the product "Essence of chicken" under item 1-B should be quashed.

(3.) In order to appreciate the contentions of the parties, it is worthwhile to state how the essence of chicken is manufactured. Annexure 8 in the material papers, which is an order passed by the Government of India on the Revision Petition under section 36 of the Act sets out the process as follows: "The commercial ssence of chicken is a hydrolysate of chicken flesh. The flesh along with the bones is finely minced suspended in water and enzymatically digested with Papain at the optimum PH under cold process until the maximum formal titre is obtained. Thus, it is not boiled as in the case of preparation of soup."