Case: Citric India Limited Vs. Union of India

number of pending appeal. Shri Pochkhanwala submitted that the claim that appeal is pending in the supreme Court is entirely incorrect because during last seven years the petitioners had never received any notice from the Supreme Court and it is inconceivable that the appeal lodged in the year 1985 would remain pending for more than seven years. Shri Desai sought adjournment and which was readily granted to ascertain about the claim of pendency of the appeal. In spite of diligent search made by the learned counsel with the assistance of the officers of the Central excise, to trace can be found of any pendency of appeal against the order of the Tribunal. In these circumstances were proceed on the basis that either appeal which is alleged to have been filed in the Supreme Court by the Department was not prosecuted or was dismissed on merits. In these circumstances the question to be determined is whether the petition filed under Article 226 of the Constitution to challenge the direction of the Tribunal in paragraph 26 quoted hereinabove, should be entertained. We are inclined to entertain the petition as the dispute is pending in this Court for last over seven years and driving the parties now to file an appeal to the supreme Court would lead to multiplicity of litigation and considerable expenses. We are conscious that when remedy of appeal is available, this Court is reluctant to exercise writ jurisdiction, but taking into consideration the peculiar facts and circumstances of the case, we are not prepared to accede to the preliminary objection raised by Shri Desai that the petition should not be entertained.( 7 ) SHRI Desai then submitted that the finding recorded by the Tribunal that the Citric Acid the product manufactured by the petitioners, is a drug, drug-intermediate or pharmaceutical is incorrect. We are afraid we cannot permit the learned counsel to raise this contention, because the Department has not challenged that finding of the Tribunal either by filing petition in this court or by filing appeal before the Supreme Court. The appeal alleged to have been filed is either not filed or stands summarily dismissed. Consequently the conclusion of the Tribunal as regards the nature of product manufactured has become final and it is not open for the department to reagitate in the present proceedings. Shri Desai then submitted that even accepting that Citric Acid is a drug, drug-intermediate or pharmaceutical still the finding of the Tribunal that unless the Company established the end-use of the manufactured product, exemption is not available, should not be disturbed. We are afraid we cannot acceded to the submission. It is necessary to reiterate that the impost of excise duty is in respect of manufacture of a product and the liability to pay excise duty accrues as soon as manufactured article comes into existence. The liability to pay duty is not dependent upon the end-use of the product and it is not open for the manufacturer to claim that the liability is dependent upon the end-use of the product and so also to the Department to claim that exemption cannot be claimed till it is established that the manufactured product is used for ultimate manufacture of a drug or drug-intermediate. The advantage of exemption cannot be denied with reference to end-use, unless exemption notification so provides. In our judgment, in view of the decision recorded by this Court in the case of Rakesh Enterprises, the contention of Shri Desai cannot be acceded to.( 8 ) SHRI Desai referred to the decision of the Supreme Court reported in 1988 (38) E. L. T. 564 (Collector of C. E. Guntur v. Andhra Sugar Ltd.) to urge that the requirement of end-use though not built into the exemption notification is not only implied but also becomes imperative in a situation when the product has uses other than drug intermediate. The learned counsel submitted that this is the ratio laid down by the Supreme Court. The submission is not accurate. On careful perusal of the entire judgment of the Supreme Court, it is obvious that the observations set out in the head-note are not the findings or conclusions of the Supreme Court. The issue before the Supreme Court was whether the Acetic Andydride manufactured by the respondents and sold to drug manufacturers is eligible to benefit of exemption under Notification No. 55/75 as amended by Notification No. 62/78 as drug intermediate. The manufacturer has succeed before the tribunal and the appeal was carried to the Supreme Court by the Collector. The Supreme Court in paragraph 2 of the judgment observed that the question is was the item manufactured a drug or an intermediate in terms of the notification. In paragraph 6 of the judgment the Supreme Court noted that on the facts of the case that Acetic Andydride manufactured was used in the manufacture of the drugs. In view of the finding of fact noticed by the Supreme Court, the question as to whether the end-use of the manufactured product can be considered to determine levy of duty or benefit of exemption notification did not come up for consideration. The supreme Court referred to the decision of the single Judge of Karnataka High Court and where the learned Judge had quoted the observations of Government of India in a revision petition to the following effect:" In the Governments view this requirement of end-use though not built into the exemption notification, is not only implied but also becomes imperative in a situation where the product is used other than as drug intermediate."It is therefore obvious that the Supreme Court has not laid down any such principle, but the head-note merely carves out what was quoted in the order passed by the Government in the revisional jurisdiction and which was noted by the Single Judge of the Karnataka High Court. In our judgment, the reliance on the decision of the Supreme Court in these circumstances is not accurate. In our judgment the petitioners are entitled to the relief.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In spite of diligent search made by the learned counsel with the assistance of the officers of the Central excise, to trace can be found of any pendency of appeal against the order of the Tribunal. In these circumstances were proceed on the basis that either appeal which is alleged to have been filed in the Supreme Court by the Department was not prosecuted or was dismissed on merits. In these circumstances the question to be determined is whether the petition filed under Article 226 of the Constitution to challenge the direction of the Tribunal in paragraph 26 quoted hereinabove, should be entertained. We are inclined to entertain the petition as the dispute is pending in this Court for last over seven years and driving the parties now to file an appeal to the supreme Court would lead to multiplicity of litigation and considerable expenses. We are conscious that when remedy of appeal is available, this Court is reluctant to exercise writ jurisdiction, but taking into consideration the peculiar facts and circumstances of the case, we are not prepared to accede to the preliminary objection raised by Shri Desai that the petition should not beare afraid we cannot permit the learned counsel to raise this contention, because the Department has not challenged that finding of the Tribunal either by filing petition in this court or by filing appeal before the Supreme Court. The appeal alleged to have been filed is either not filed or stands summarily dismissed. Consequently the conclusion of the Tribunal as regards the nature of product manufactured has become final and it is not open for the department to reagitate in the present proceedings. Shri Desai then submitted that even accepting that Citric Acid is a drug,or pharmaceutical still the finding of the Tribunal that unless the Company established theof the manufactured product, exemption is not available, should not be disturbed. We are afraid we cannot acceded to the submission. It is necessary to reiterate that the impost of excise duty is in respect of manufacture of a product and the liability to pay excise duty accrues as soon as manufactured article comes into existence. The liability to pay duty is not dependent upon theof the product and it is not open for the manufacturer to claim that the liability is dependent upon theof the product and so also to the Department to claim that exemption cannot be claimed till it is established that the manufactured product is used for ultimate manufacture of a drug orThe advantage of exemption cannot be denied with reference tounless exemption notification so provides. In our judgment, in view of the decision recorded by this Court in the case of Rakesh Enterprises, the contention of Shri Desai cannot be accededcareful perusal of the entire judgment of the Supreme Court, it is obvious that the observations set out in theare not the findings or conclusions of the Supreme Court. The issue before the Supreme Court was whether the Acetic Andydride manufactured by the respondents and sold to drug manufacturers is eligible to benefit of exemption under Notification No. 55/75 as amended by Notification No. 62/78 as drug intermediate. The manufacturer has succeed before the tribunal and the appeal was carried to the Supreme Court by the Collector. The Supreme Court in paragraph 2 of the judgment observed that the question is was the item manufactured a drug or an intermediate in terms of the notification. In paragraph 6 of the judgment the Supreme Court noted that on the facts of the case that Acetic Andydride manufactured was used in the manufacture of the drugs. In view of the finding of fact noticed by the Supreme Court, the question as to whether theof the manufactured product can be considered to determine levy of duty or benefit of exemption notification did not come up foris therefore obvious that the Supreme Court has not laid down any such principle, but themerely carves out what was quoted in the order passed by the Government in the revisional jurisdiction and which was noted by the Single Judge of the Karnataka High Court. In our judgment, the reliance on the decision of the Supreme Court in these circumstances is not accurate. In our judgment the petitioners are entitled to the relief.