VENUS REMEDIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE instant appeal under Section 35G of the Central Excise Act, 1944 (for brevity - 'the Act') has been filed against the order dated 29 -10 -2010 (Annexure A -15) passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for brevity - 'the Tribunal'), which was certified by the Registry of that Tribunal on 12 -11 -2010 (2011 (264) E.L.T. 73 (Tri. -Del.)). The appellant is engaged in production and manufacture of various pharmaceutical products, including intravenous injectable medicaments. As per item No. 47A of Notification No. , dated 1 -3 -2000, as amended by No. 21/2000, dated 2 -3 -2000, No. 22/2000, dated 6 -3 -2000, No. 29/2000, dated 31 -3 -2000, No. 36/2000, dated 4 -5 -2000, No. 38/2000, dated 12 -5 -2000, No. 50/2000 -C.E., dated 29 -9 -2000 and Notification No. 51/2000 -Central Excise, dated 9 -10 -2010, all "intravenous fluids" were exempted excisable goods, meaning thereby that the same were exempted from excise duty. As per the Explanatory Note to the Finance Bill of 2001, the Central Government felt that a clarificatory change was required and accordingly Notification No. , dated 1 -3 -2001 (Annexure A -2) was issued and exemption on excise duty was limited to intravenous fluids, which were used for sugar, electrolyte or fluid replenishment, thereby restricting the scope of intravenous fluids. In pursuance of that notification, the respondent -Department issued a show cause notice dated 29 -10 -2002 (Annexure A -3), proposing a demand of Rs. 18,12,240/ - from the appellant under Section 11A of the Act. In reply to that show cause, it was submitted by the appellant that it was entitled to exemption and that proposal to levy duty interest and penalty was untenable. The Central Excise Commissionerate, Panchkula, upheld and confirmed the demand raised by the Department, vide order dated 5 -8 -2003 (Annexure A -4). The appellant preferred statutory first appeal to the Tribunal, vide memorandum dated 29 -10 -2003 (Annexure A -5), submitting therein that the subsequent notification was clarificatory in nature and did not revoke the exemption available to it and that addition of medicaments to intravenous fluids did not disentitle the manufacture/assessee from exemption. A cross -appeal was filed by the respondent. The Tribunal, vide order dated 30 -11 -2005 (Annexure A -6) upheld its contentions and set aside the demand of duty raised by the Department, primarily relying upon its decision dated 24 -6 -2004 rendered in Prem Pharmaceuticals v. CCE, Indore - : 2004 (172) E.L.T. 273 (Tri. -Del.) (Annexure A -7), wherein the Tribunal had similarly held that addition of medicaments to intravenous fluids did not bring such fluids out of the purview of 2001 notification. Against that order, the Department filed an appeal before Hon'ble Supreme Court, inter alia, urging that intravenous products falling in Schedule 'H' of the Drugs & Cosmetics Act, 1945 (hereinafter referred to as '3945 Act') cannot claim exemption, apart from 2001 -02 budget restricting the definition of 'Intravenous fluids' entitled to exemption. The Hon'ble Supreme Court accepted the appeal of the Department, vide order dated 31 -3 -2009 (Annexure A -8) (2009 (236) E.L.T. 625 (S.C.)) and remanded a bunch of appeals to the Tribunal, directing it to ascertain the findings on the second issue i.e. Schedule 'H' of the 1945 Act and its effect. Pursuant to that remand order, the Tribunal at Mumbai re -considered the matter in Parentral Drugs (I) Limited v. The Commissioner of Customs and Central Excise, Indore (Annexure A -9) and vide its order dated 18 -12 -2009, remitted the matter to the adjudicating authority for re -consideration, after affording the parties sufficient opportunities to adduce adequate material to ascertain the fact of intravenous products being Schedule 'H' drug for the purpose of exemption, in terms of notification dated 1 -3 -2001. After the remand, it filed detailed submissions and material to support its stand that mere presence of medicaments in the intravenous fluids manufactured by it and used for sugar, electrolyte or fluid replenishment cannot disentitle exemption from duty in terms of notification dated 1 -3 -2001. The Department took the stand that the goods so manufactured contained medicaments and were labelled schedule 'H' and, as such, fell outside the purview of that notification. The Tribunal, vide order dated 29 -10 -2010 (Annexure A -15) accepted the contentions of the Department and dismissed the appeal. Vide that order, the appeals of the other assessees were also decided and some of them challenged that order before the Madhya Pradesh High Court, Indore Bench and the matter is still pending for consideration.

(2.) IN the appeal, the appellant challenged the impugned order, on the following grounds: -

(3.) WHILE challenging the order of the Tribunal, learned counsel for the appellant made three -fold submissions. He submitted that Hon'ble the Supreme Court, while remanding the case, vide order dated 31 -3 -2009 (2009 (236) E.L.T. 625 (S.C.)), categorically observed that if the Tribunal felt that it required further evidence, it may either itself decide that point after giving opportunity to the parties or it may remit the matter to the adjudicating authority for a fresh decision on factual aspect in accordance with law. The appellant moved an application for additional evidence for proving that merely labelling of fluid as Schedule 'H' will not make any difference for its use as sugar, electrolyte or fluid replenishment. That application was disallowed without recording any reason. Had an opportunity been given to lead that evidence, the appellant would have successfully proved that its product was exempted from excise duty. He further argued that medicament of the intravenous fluids, by adding items such as antibiotic etc. and labelling the same as Schedule 'H' drug, as per mandatory provisions of 1945 Act, will not change the dominant purpose of use for sugar, electrolyte or fluid replenishment. Without deeply going into that question, the Tribunal came to the conclusion that after the medicament of intravenous fluids and labelling the same as drug, it ceases to be intravenous fluids used for sugar, electrolyte or fluid replenishment. In the last, he submitted that similar questions were raised before the other Bench of the Tribunal, which came to a different conclusion and there was no occasion for the Tribunal to come to the conclusion that similar intravenous fluids manufactured by the appellant were not exempted from excise duty. Uniformity in the findings of different Benches of the Tribunal was required to be maintained. He prayed for quashing of the order of the Tribunal and for recording a finding that the appellant is entitled to the benefit of the Notification dated 1 -3 -2001.