K.N.SINHA,J. - (1.) HEARD Sri V.P. Srivastava, learned Senior Counsel for the applicant and Sri Ajai Singh learned Counsel for the Central Government representing the opposite party No. 1 and learned A.G.A.
(2.) THE brief fact, as stated in the affidavit, is that the applicant is Director in M/s. Surya Herbal Limited situated at Noida. It is further stated that the company manufactures two products namely 'Roop Amruta' and 'Daant Pari'. On information received by the opposite party No. 1 regarding the evasion of the excise duty, the factory premise was searched on 28 -3 -2006 and stock of the products was detained. No F.I.R. was lodged for the said offence, but the authorities of opposite party No. 1 registered this case on own giving crime No. 2 of 2006 under Section 4/9A/9AA/9 of the Central Excise Act, 1944 (hereinafter referred to as an 'Act') and Section 420/467/468/471 Indian Penal Code. The applicant was also arrested and copy of arrest memo was served, which is Annexure No. 1 to the affidavit. The applicant moved application for bail before the Sessions Judge, Meerut which was rejected on 15 -5 -2006. The present bail application has been moved on the ground that applicant runs a factory for preparing the Ayurvedic medicines. A licence has been issued in favour of T.V.C. Sky Shop Limited for manufacturing of Ayurvedic medicines through Surya Herbal Limited by the Director of Ayurvedic and Unani Services, U.P. Lucknow. Accordingly these Herbal medicines were being manufactured for T.V.C. Sky Shop Ltd. As per the licence certain items have been approved by the Ayurvedic and Unani Director to be manufactured by the applicant including the above two. The photo copy of the licence is Annexure No. 3. The T.V.C. Sky Shop Limited works on television net work and it entered into agreement with applicant's factory to manufacture the above two medicines for which the applicant concerned has acted as 'Loan Licencee' and made available its manufacturing facility for manufacturing the Ayurvedic medicines. The photo copy of the agreement is Annexure No. 4. The wrapper provided to these medicines clearly indicate the same. According to the applicant, the problem arose that as per Central Excise Rules, above two items are covered under Chapter 33 of the Central Excise Tariff Act, 1985 and assessment of excise duty is to be made on the basis of M.R.P. under Notification No. 13/2002 -CE(NT) dated 1 -3 -2002 issued under Section 4 -A of the Act. This chapter deals with cosmetic and toilet preparations. The medicines are not covered under Chapter 33 and M.R.P. based valuation under Section 4A of the Act is not applicable. The Excise duty on Ayurvedic medicines is payable under Section 4 of the Act and the same are classified under Chapter 30 of the Central Excise Tariff Act, 1985 (hereinafter referred to as Tariff Act') and not under Chapter 33 of the Tariff Act. Section 4 of the Act deals with the Central Excise duty as per transaction value and Section 4A of the Act deals with the valuation of excisable goods with reference to M.R.P. It has been further said by stating an example that if the maximum retail price of the product is printed as Rs. 100.00, 40% abatement is permitted for the purposes of fixing central excise duty and it will be valued at Rs. 60 and the central excise duty shall require to be paid at the rate of 16% plus 2% as Education Cess on excise duty on the value of Rs. 60. Thus, according to the applicant, this is the ratio of calculation. Section 9 of the Act deals with the offence and penalty which refers that any evasion done it has got the penal consequences. Section 9A speaks that the offences to be non -cognizable. Section 9AA of the Act deals with the offence of the companies. If the notification dated 1 -3 -2002 is taken into consideration then at serial No. 34 tooth paste is mentioned. In the entire notification nowhere tooth powder is mentioned. Accordingly the excise duty on tooth powder is required to be paid under Section 4 of the Act and not under Section 4A of the Act. The department of opposite party No. 1 claims that 'Roop Amruta' is a beauty or make up preparation and 'Daant Pari' is toiletries and disputes both of them to be Ayurvedic medicines. The Notification dated 1 -3 -2002 shows difference between paste and powder. A photo copy of the provisions of Chapter 33 of Tariff Act is Annexure No. 8. The indications mentioned on the wrapper of both the preparations are very clear as detailed in paras 18 and 19. In this connection reliance was also placed on the judgment of Hon'ble The Apex Court 2006 (196) E.L.T. 3 (S.C.), Puma Ayurvedic Herbal (P) Ltd. v. Commissioner of Central Excise Nagpur. The notification dated 1 -3 -2002 has been amended by Notification dated 1 -3 -2006 but in that too there is no mention of tooth powder. The amended notification is Annexure No. 11.
(3.) THE next ground taken was that the applicant had a heart -attack in the year 2005 and his coronary angioplasty was done. The prescription of Escorts Hospital is Annexure No. 12. On these grounds the petitioner has claimed his bail.;