Decided on December 16,1970

UNION OF INDIA Respondents


- (1.) In this application the petitioner, which is a public limited company carrying on manufacturing trade in biological and non-biological drugs, patent and proprietary medicines, challenges the order passed by the Assistant Collector, Central Excise, on the 1st August, 1962, and the demand notice dated 13th March, 1962 issued by the respondent No. 4 and the order of the Collector, Central Excise, Calcutta, dated 23rd January, 1963, to deposit a sum of Rs. 12,646.36 np.
(2.) The Finance Act 1961, being Act 14 of 1961 amended entries in the First Schedule to the Central Excises and Salt Act, 1944 by inserting item No. 14E and imposed the Central Excise duty on patent and proprietary medicines at 10 per cent, ad valorem. The petitioner in this case has asserted that pre-excise book stock, as it stood on the 28th February, 1961, was declared by the petitioner to the Excise Authority as non dutiable goods and clearances of the said goods were allowed from time to time to the petitioner under gate passes issued under relevant rules of the Central Excise Rules 1944. Thereafter pursuant to the verbal requisition made on the 19th August, 1961, from the Assistant Collector, Central Excise, Calcutta, the petitioner by a letter sought permission to keep stock of "Arseno-typhoid" vaccine and to keep them unlabelled in cold storage till the time of sale or till expiry of period of two years from the date of production whichever was earlier. Reference was made for this permission to certain provisions of the Drug Rules and British Pharmacopoeia, it is not necessary for me to advert to them in detail. The petitioner has further asserted that on receipt of the aforesaid letter the Excise Authority by certain gate passes released these goods which according to the petitioner were pre-excise stocks and declared non-dutiable. Thereafter on the 13th November, 1961, the Deputy Superintendent, Central Excise, visited the petitioner's factory and noted in the stock account of the pre-excise stock as follows : "since the vaccines were not labelled and were lying in cold storage, the same cannot be taken as pre-excise stocks as claimed by the licensee ....................." On the 20th February, 1962, the Assistant Collector, Central Excise by his letter pointed out that the Superintendent of the Central Excise was deputed by him and he had duly verified the stock and found that the practice of the Company was to keep all the vaccines and injections in cold storage prior to their labelling, as the petitioner would have to show the date of manufacture on the labels when they were taken from the cold storage it was also stated that since the labels would have been damaged due to such storage, the ampoules would have required fresh labelling at the time of sale. The Superintendent found 20 items of unlabelled injections in the cold storage wrongly entered in R.G. 1. as manufactured by them and he accordingly directed these should be struck off the R.G. 1. and kept as unmanufactured stock in the factory. Thereafter the petitioner made certain representations. On March, 13, 1962, a demand notice was issued by the respondent No. 4 claiming payment of Rs. 12,646.36 np under Rule 9(2) of the Central Excise Rules, 1944. The petitioner protested against the demand of duty of stock and claimed withdrawal. There were representations and appeals against the demand to deposit the amount of moneys. It is not necessary for me to advert to them in detail in the view I have taken of this application.
(3.) The main question with which I am concerned in this application is the propriety of the demand made for the sum of Rs. 12,646.36 np. Several grounds were taken in the petition. Mr. Arun Kumar Dutta, learned Counsel for the petitioner, however concentrated his attack on two points. It was contended firstly by Mr. Dutta that once the goods had been cleared in view of Rule 9A of the Central Excise Rules. It was not permissible for the Government to claim later on the payment of excise duties. Mr. Dutta in support of this proposition drew my attention to the observations of the Supreme Court in the case of Orient Paper Mills V/s. Union of India, 1967 AIR(SC) 1564. It was next contended by Mr. Dutta that labelling was not manufacture and it was also neither incidental nor ancillary to manufacture as defined in Section 2 (f) of the Central Excises Act, 1944. Mr. Dutta contended that labelling might be manufacture under the Drugs Act, 1940, but for the purpose of levy of duty under the Central Excise Act it was not relevant according to Mr. Dutta.;

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