KAPADIA, J. - (1.) THESE appeals under section 35-L(b) of Central Excise Act, 1944 are directed against a majority decision dated 11-1-1999 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, by which common order, the Appeal Nos. E-736/91-C, E-738/91-C and E/747/91-C filed by the appellant were dismissed.
(2.) THE facts, briefly, stated are as follows: M/s. Sarabhai M. Chemicals, the appellant herein, is a manufacturer of bulk drugs in India. It manufactures Ascorbic Acid and Salts of I.P. (Vitamin 'C') as well as Sorbitol Solution U.S.P. The said goods fall under Chapter Heading 29 of Central Excise Tariff Act, 1985. By Notification No. 234/86, dated 3-4-1986, the Central Government exempted the bulk drugs as defined in the said notification from payment of excise duty. The appellant submitted its classification list for approval claiming exemption under the said notification. By letter dated 17-4-1986, the Assistant Collector permitted the appellant to clear the bulk drugs under the above notification subject to production of a certificate from the Drugs Controller, Government of India. The appellant obtained certificates from the Drugs Controller dated 17-4-1986, 15-5-1986, 21-5-1986 and 6-8-1990, in respect of their claim for exemption under the aforestated notification. In the classification list, exemption was sought by the appellant under Notification No. 234/86 on the basis of certificates received by the appellant from the Drugs Controller, Government of India. The classification lists were scrutinized, verified and approved by the Assistant Collector. The appellant cleared the goods upon submission of the gate passes in which they disclosed the names of the consignees. The appellant also submitted its monthly returns on excisable goods manufactured by it in the prescribed RT-12 Forms, which gave the particulars of the goods removed, gate passes under which the goods were removed etc. Three show-cause notices were received by the appellant on 30-12-1987,6-4-1988 and 20-6-1988 from Collector of Central Excise, Vadodara, denying the exemption under Notification No. 234/86. All the three showcause notices alleged that the appellant has wrongly availed nil rate of duty in respect of its clearances by not bringing to the notice of the department the fact that certain quantities of sorbitol solution and vitamin 'C' had been sold to non-pharma concerns, knowing fully well that the commodities would not be normally used as drugs or medicines by its customers. By the said show-cause notices, the appellant was asked to show-cause inter alia as to why excise duty should not be recovered under section 1 l-A(l) of the said Act read with rule 9(2) of the Central Excise Rules, 1944. The said three show-cause notices related to the period, April 1986 to November, 1986, March 1984 to February 1986, and April 1986 to 30th April, 1987. The grounds for demand stated that on verification of the records of the appellant, it was noticed by the department that the appellant had cleared sorbital solution to cigarette manufacturers, which fact was not brought to the notice of the department at the time of clearance.
(3.) BY its reply dated 2-3-1988, 18-7-1988 and 6-10-1988 respectively, the appellant submitted that the Drugs Controller to the Government of India had issued a certificate certifying sorbitol solution etc. as a Bulk Drug after scrutinizing and examining the product; that the sorbitol solution manufactured by the appellant met the requirement of the said notification; and that the word "normally" used in the notification did not restrict the exemption based on individual end use. It was urged that if the intention was to restrict use of sorbitol solution by drug manufacturing units only for diagnosis, treatment, mitigation or in prevention of diseases or as an ingredient in any formulation then the Legislature would have used the word "exclusively" instead of the word "normally" that the notification did not require the appellant to ascertain the end use at the time of clearance of a bulk drug from the factory and that once the certificate from the Drugs Controller was ' issued in terms of the Notification No. 234/86, no further requirement remained to be complied with in the matter of availing exemption under the notification. It was argued that the proviso to the notification did not leave any scope for further enquiry regarding the end use of the product on the part of the proper officer to grant exemption to the product which was certified as 'bulk drug' by the Drugs Controller. It was submitted that the Government did not intend to put the burden of production of end use certificate on the appellant; that had the Government intended to do so, some such provision would have been made in the notification. It was further submitted that the certificate granted by the Drugs Controller was final for all clearances of bulk drugs for exemption. It was submitted that the demand of duty by the department on sorbitol solution was without jurisdiction and without any authority of law; that it was based on misinterpretation of the word "normally" used in the notification and consequently, the demand notice was bad-in-law and a nullity. It was submitted that a conjoint reading of the proviso and the explanation given in the notification indicated that when the Drugs Controller issues a certificate under the notification to the effect that the goods in question were bulk drugs as given in the explanation, the goods were entitled to exemption. On the point of limitation, it was submitted that the appellant had filed their classification list to which the department had never objected. It had filed RT-12 assessments and the same were approved by the department from time to time. The appellant bona fide believed that the goods in question fell under the said notification. The appellant was allowed to clear the goods by the department and consequently, invocation of rule 9(2) of the Central Excise Rules by the department was not warranted, as there was no violation of rule 9(1). It was argued that the normal trade pattern of putting sorbitol solution in the market was through distributors and consequently it was impossible to get an end use certificate at the time of clearance of the consignments at the factory gate. By orders dated 23-11-1990, 22-11-1990 and 23-11-1990, the Collector rejected the contentions of the appellant and confirmed the demands in all the three notices.;