Customs, Excise and Gold Tribunal - Delhi
Sbl Pvt. Ltd. And Shri Rajesh Gupta vs Cce on 28 May, 2004
Equivalent citations: 2004(95)ECC435, 2004(172)ELT271(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. M/s. SBL Private Limited is a manufacturer of Dilutions Eye Drops etc. The only issue that arises for consideration is as to whether the following products manufactured by them contained alcohol. If they do, they will not be liable to Central Excise duty in view of Chapter Note 4 of Chapter 30 of Central Excise Tariff Act; 1985 and if they don't they will be liable to Central Excise duty under Chapter 30. The items are:
(i) Dilutions; (ii) CME Eye Drops; (iii) Ointments other than Graphite & Sulfur; and (iv) Speciality Tablets
2. The appellant's contention is that these items contained Alcohol and they have been discharging duty under Medicinal and Toilet Preparations Act, 1955 and therefore levy of Central Excise duty is not permissible. They also produced certificates from Shriram Institute for Industrial Research, New Delhi and Oasis Test House, Ahmd. in support of their contention. Test reports made by the Central Revenue Control Laboratory during June 2003 also confirmed the presence of alcohol (Ethyl Alcohol). The appellant also relied on judicial pronouncement, mainly the judgment of the Hon'ble Supreme Court in Dabur India v. State of U.P., 1990 (30) ECC 1 (SC) : 1990 (49) ELT 3 in support of their contention that their products in question should be treated as containing alcohol.
3. Despite the above evidence and contention raised by the appellant, the learned Commissioner of Central Excise has held in the impugned order that the goods in question are liable to Central Excise Duty as they did not contain Alcohol. This finding is mainly based on the report of the Central Revenue Control Laboratory during April 2000 etc. stating that the sample is "free from Ethyl Alcohol". The period of demand in the present case in from 1997-98 to 2000-2001. The Commissioner has held that report for the period subsequent to the show cause notice cannot form the basis for adjudication. As regards the Hon'ble Supreme Court's decision, the learned Commissioner has observed that the decision in the ease of Dabur India Ltd., is not applicable to the present case inasmuch as the decision of the Supreme Court was on the finding that alcohol was found present in the final product. The Commissioner has noted as under in para 19 of the order:
"19. It may be seen that both the aforementioned decisions of the Supreme Court were issued on the findings that alcohol was found present in the final product; in view of the presence of the alcohol in the final products, it was held by the Supreme Court that the products were liable to duty under the provisions of Medicinal and Toilet Preparation (Excise Duties) Act, 1955 and not under the Central Excise Act, 1944. In the aforementioned decisions, the Supreme Court has nowhere held that mere use of Mother Tincture, which contains alcohol, makes the products excisable under the 1955 Act though in the final product there may be no trace of alcohol".
4. We have perused the records and heard both sides. The submission of the learned Counsel for the appellant is that it is settled law that for the purpose of attracting provisions of Medicinal and Toilet Preparation (Excise Duties) Act, 1955 a product need not necessarily retain alcohol in its final marketed form. It would be sufficient if alcohol or an item containing alcohol as an ingredient was used in its manufacture. The learned Counsel pointed out that this position is clearly noted in para 11 and 13 of the judgment. He, therefore, pointed out that the Commissioner's observation in the order that the Apex Court's decision was based on the finding that alcohol was present in the product in question is clearly erroneous. On the question of the goods in question having alcohol, the learned Counsel has submitted that test reports by Shriram Institute for Industrial Research, New Delhi and Oasis Test House, for the relevant period itself indicated that the products contained alcohol. The test carried out in the Central Revenue Control Laboratory during that period failed to detect alcohol because it was not following the correct method of test, namely, Gas Layer Chromatography technique. However, during the later period when the test was carried out following the correct methodology, that laboratory also confirmed the presence of alcohol in the sample. The learned Counsel also pointed out that it is not being disputed that appellants' ingredients for manufacture have remained the same during the entire period. Therefore, the Commissioner should have accepted the finding for the later period as applicable to goods manufactured during the previous period also.
5. A perusal of the judgment of the Apex Court in Dabur India case makes it clear that the physical presence of Alcohol in the final product is not necessary to attract the provisions of Medicinal and Toilet Preparation (Excise Duties) Act, 1955. That is also not an issue in the present case since test reports of the appellant's samples had confirmed presence of alcohol. We are merely noting this legal position only to show that the learned adjudicating authority has not correctly understood the judgment. The factual position as noted already is that (....... illegible) two-test reports of private test laboratories confirmed the presence of alcohol in the samples drawn during the Show Cause Notice period. There is no doubt cast on the authenticity or reliability of these reports. For the subsequent period, when the correct method of test, namely, Gas Layer Chromatography technique was followed, the Central Revenue Control Laboratory also confirmed the presence of alcohol. Therefore, the failure of that laboratory to detect alcohol during the earlier test can only be on account of use of wrong method of test earlier. Further, it is also the un-controverted contention of the appellant that the ingredients used by it for production remained the same during the period of show cause notice as well as the later period. In fact, the appellants have maintained record relating to production on regular basis. In these circumstance, we are of the opinion that the finding of the learned adjudicating authority is not sustainable on facts on record or the law pronounced by the Apex Court. The impugned order is required to be set aside with consequential relief, to the appellants. We do so, and allow the appeals.