JAYANT VITAMINS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner No. 1 is a public limited company having their registered office at Ratlam. The company is engaged in manufacture of drugs and Pharmaceuticals including Vitamin C and Sorbitol. The petitioner No. 2 is a shareholder of the petitioner No. 1. The company is situated in the backward area so declared by the Government of M. P. in the Industrial Area of Ratlam. The petitioners are aggrieved by the show cause notice dated 24th February, 1988 demanding from the petitioners duty of excise on the removal of one of the products of the petitioners viz. "sorbitol". According to the petitioners, the demand made in the impugned notice is illegal, without authority of law, barred by limitation and without jurisdiction: The petitioners contend that Sorbitol 70 per cent and Sorbitol powder BP is produced by the petitioners which conform to the pharmacopoeial standards. They are bulk drugs and classifiable under residuary Item No. 29. 24 of Chapter 29 of the Schedule to the Central Excise Tariff Act, 1985 (hereinafter called the Act) which came into force from 1-3-1986.

(2.) AFTER the coming into force of the Act from 1-3-1986, the petitioners Company filed a classification list classifying the said products under the above Chapters and cleared the products after payment of duty of excise on removal of the said products at the rate of 15 per cent ad valorem. Thereafter by Notification dated 3-4-1986, the Central Government, in exercise of its powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 exempted bulk drugs failing under Chapter 28 or Chapter 29 of the Schedule to the Act from the whole of the duty of excise leviable thereon under Section 3 of the Central Excises and Salt Act, 1944 on the terms and conditions mentioned therein. The Notification of the Govt. of India granting exemption reads as under:

(3.) THEREAFTER on 27-5-1986 the petitioners filed a refund claim in respect of the duty paid from 3-4-1986 to 26-4-1986. The then Assistant Collector of Central Excise passed an order dated 18/21-7-1986 granting a refund of Rs. 5,78,355. 24 out of the total refund as claimed by the petitioners. The remaining claim was disallowed on the ground that the petitioners have already realised the duty from their customers. After the aforesaid order of refund having been passed, a notice was issued on 29-6-1987 to the petitioners by the Central Excise Authorities to show cause as to why the order earlier passed for refund be not quashed in view of the fact that the petitioners had suppressed facts; to which the petitioners filed a reply, but the Assistant Collector rejected the contention of the petitioners. The petitioners have alredy preferred an appeal to the Collector Central Excise (Appeals) against that order. According to the petitioners the said products are bulk drugs and they have been certified as bulk drugs by the Drugs Controller as goods classified for exemption under the said notification. The said products were removed from time to time with the approval and full knowledge of the officers of the respondent No. 1 without payment of any duty of excise and the petitioners have also not recovered any duty from its customers. As such they have not unjustly enriched themselves nor have they included any duty amount in their invoice prices.