Customs, Excise and Gold Tribunal - Delhi
Haresh Brothers vs Collector Of Customs on 7 June, 1988
Equivalent citations: 1989(40)ELT122(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. Brief facts of the case are as follows :
The appellants herein imported two consignment of 350 USP liquid paraffin, heavy. The original assessment of these goods were made by the Customs authorities under Tariff Heading 27.10(1) Customs Tariff Act read with Item 68 Central Excise Tariff. The appellants thereafter filed two refund applications on the ground that the goods imported are a drug and should be classified under Central Excise Tariff Item 68 and are exempted from countervailing duty (C.V.D.) under Notification No. 55/75. The original authority, namely Assistant Collector rejected the refund claims as untenable on the ground that the appellants herein have neither mentioned end product nor they have furnished drug licence, flow chart to show the end use of the item imported as drug intermediate manufactured in their factory.
On appeal before the Collector of Customs (Appeals), the said Collector admitted the contention of the appellants herein that the goods imported were drugs. He has, however, observed that in order to avail the benefit of Notification 55/75 as claimed by the appellants "they (drugs) should be shown to have been so made and marketed. Whether the importer is a manufacturer is not material, as long as the end use drugs is proved". Therefore, he allowed the appeal to the extent that the appellants are able to satisfy the Assistant Collector of Customs that the consignments imported by them was marketed as drugs either by themselves or by manufacturers of drugs to whom these very goods were sold by them. It is against this last observation of the Collector by way of a condition attached to allowing the appeal of the appellants herein that an appeal has been filed before the Tribunal. Department has filed last two subject appeals contending that the importer being a trader cannot have benefit of Notification No. 55/75.
2. The appellants learned advocate Shri S.D. Nankani submitted that the Collector (Appeals) has clearly admitted the goods as drugs and therefore, they are squarely covered by the Notification 55/71-C.E., dated 1-3-1975. The said notification does not attach any condition that the goods covered by the said notification must be marketed as drugs. The condition of marketing attached by the learned Collector (Appeals), according to the learned advocate, is clearly beyond the terms of the said Notification 55/75. Learned advocate has relied upon a judgment of the Tribunal in the case of Babulal Bros. v. Collector of Customs, Bombay [1988 (34) ELT 723] which in turn relies upon Bombay High Court's judgment in the case of Rakesh Enterprises and Ors. v. Union of India and Ors. [1986 (20) ELT 906]. It is mentioned in the aforesaid judgment of the Tribunal that according to the decision of Bombay High Court in the case of Rakesh Enterprises (supra) it was not necessary to establish that the drug intermediate is actually so used. All that is necessary for the purpose of claiming exemption under the notification is to show that goods in respect of which exemption is claimed is drug or intermediate". The notification under consideration before the High Court of Bombay and before the Tribunal in the aforesaid cases was Notification 55/75 which is under consideration in the instant case as well. In view of this clear ratio, the learned advocate submits that the condition attached by the Collector (Appeals) in the impugned order is, therefore, unwarranted and should be set aside.
3. Learned JDR Shri C.V. Durghayya appearing for the Revenue has stated that goods are classifiable under Tariff Item 68 and he cites in support a decision of the Tribunal in the case of Savita Chemicals Ltd., Bombay v. C.C., Bombay [1987 (30) ELT 434]. It has been held by the majority of the Members of the Bench that liquid paraffin USP grade in that case was classifiable under Tariff Item 68 Central Excise Tariff as had been done by the lower authorities. Learned JDR, therefore, urges that in view of this decision of the Tribunal the goods should be ordered to be reclassified under Tariff Item 68 and the matter be remanded to the lower authorities for redetermining the relief by way of refund, if any, to the appellants herein.
4. Learned advocate replying to the point raised by the learned JDR has stated that the fact that the goods are drugs is no longer open to question. This has been held so by the lower appellate authority which has not been challenged by the department by way of any cross-objections. Hence this finding of the lower appellate authority cannot be challenged at this stage. He has also pointed out that Tribunal's decision in the case of Nav Bharat Enterprises (P) Ltd. [1983 ELT 1134] clearly rules out assessment of liquid paraffin under Tariff Item 11A Central Excise Tariff on the ground that before a product it can be assessed under the said Tariff Item 11A it must be derived from refinding of crude petroleum and that it should not be a product obtained by reforming, blending or otherwise treating the products derived from refining of crude petroleum. So far as assessment under Tariff Item 8 Central Excise Tariff is concerned, learned advocate has pointed out that this has to be done on the basis of tests of flame height viscosity and bituminised contents and no such tests had been carried out by the department in the instant two consignments covered under the present appeal. Accordingly, there is no case for assessment of the goods under Tariff Item 8 as urged by the learned JDR.
5. We have carefully considered the pleas advanced on both sides. We are inclined to agree with the appellants' learned advocate Shri S.D. Nankani. On the basis of , material available on record, it is apparent that the goods are of pharmacopoeial grade and they are non-proprietary. Accordingly, they are drugs and, as such are clearly covered by Notification 55/75. Reliance placed by the learned advocate for the appellants on the decision of 'C Bench of the Tribunal in the case of Babulal Bros. which in turn follows Bombay High Court's decision in the case of Rakesh Enterprises is well founded. It is also necessary to observe that the condition attached by the Collector (Appeals) in the impugned order on the analogy of drug intermediates is unwarranted. The condition for drug intermediates regarding end-use was considered necessary because those drug intermediates could be used as chemicals in other allied chemical industries. Here the goods are clearly drugs being of pharmacopoeial grade as mentioned earlier and therefore, there is no reason to attach any condition to such goods for the purpose of extending the benefit of Notification 55/75. We do not accept the Department's contention in its two appeals that importer must be an actual user is necessarily implied in Notification 55/75. No such implication can be read in the notification in respect of goods which are admittedly 'drugs'. Department clearly admits in the two appeals that the goods are assessable under Item 68 Central Excise Tariff. In effect it admits that the goods are 'drugs'.
6. In view of the foregoing discussion we allow the appeal with consequential benefit to the appellants. Consequently last two appeals filed by the Department are dismissed.