T.N. DADHA PHARMACEUTICALS versus COLLECTOR OF CENTRAL EXCISE, MADRAS

Citation: [2003] 1 S.C.R. 897 · Decided: 05-02-2003 · Supreme Court of India · Bench: S.S.M. QUADRI · Disposal: Appeal(s) allowed

Judgment (excerpt)

T.N. DADHA PHARMACEUTICALS 
A 
v. 
COLLECTOR OF CENTRAL EXCISE. MADRAS 
FEBRUARY 5, 2003 
(SYED SHAH MOHAMMED QUADRI AND ASHOK BHAN. JJ.] 
B 
Central Excise Act, 1944/Central Excise Rules, 1944: 
S. II-A (/)!Rules 8(/)-E.temption Notification No. 1/6169-Drug- C 
Darza1110/ Injection I. V.-Containing Metronidazole-For assess111ent year 
1982-83 classification list No. 7182 filed claiming exemption- Exemption 
approved-Ho11 1ever, later it transpired that Darzamol Injection I. V. also 
contained Dextrose, an item not eligible for exemption-Accordingly, shoH' 
cause notice issued on 17. 6.1987 that assessee suppressed the fact in 
classification list No. 7182-Exemption sought to be withdrawn for the period D 
12.7.1982 to 11.10.1984 and demand raised under proviso to s.11-A(/)-
He/d, Dextrose in Darzan1ol Injection is not a phar1naceutica/ necessity, nor 
could it be considered as therapeutically inert, therefore, assessee cannot 
c/ai111 exe1nption-Withdral11al of exemption is upheld-However. as regards 
Revenue in,1oking provisions of proviso to s. I J.A(J) for raising the de1nand 
"'ithin ettended period of five years, since Revenue is alleging that there has E 
been suppression of fact, burden is on it to sho11• by producing the actual 
classification filed by assessee, to show that there is no nJention of 'Dextrose· 
under column (4) and there has been suppression of fact-Revenue has failed 
to discharge the burden, therefore, it can not be said that proviso to s./ J-A(/) 
is attracted-Demand relating to extended period set aside-Burden of proof F 
faemption Notification No. 116169-Drug-Darzamol Injection 1. V.-
Containing Metronidazole (IP) and Dextrose-Dextrose not eligible for 
exemption-Demand of excise duty raised withdrawing exemptio~Appeal by 
assessee-Dismissed by Collector (Appeals) holding thot he had no jurisdiction 
to entertain the appeal-Appeal by Assessee before CEGAT-CEGAT disposing G 
of the appeal without deciding whether Collector (Appeals) had jurisdiction 
lo entertain the appeal or not-Held, mailer remilled to CEGAT for fi'esh 
· disposal-Appeal-Jurisdiction of Collector (Appeals). 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 2123-
H 
897 
898 
SUPREME COURT REPORTS 
[2003] I S.C.R. 
A 2124 of 1994. 
B 
+-
From the Judgment and Order dated 2.' 12/1993 of the Customs. Excise 
and Gold (Control) Appellate Tribunal. New Delhi passed in Appeal Numbers 
E-331/88-C and E/1329/89-C. 
S. Muralidhar, for the Appellant. 
Jaideep Gupta and Mrs. Rekha Pandey for Mr. B.K. ·Prasad, for the 
-f'. 
Respondents. 
C 
The following Order of the Court was delivered : 
D 
These two appeals, by the assessee, arise from the order of the Customs, 
Excise and Gold (Control) Appellate Tribunal (CEGA T), New Delhi in Appeal 
'-1. 
Nos.E/331188-C and E/1329/89-C made on December 2, 1993~ 
The assessee manufactures, among other pharmaceutical formulations, 
Darzamol Injection J.V. under a licence granted to it by the Drug Controller, 
Tamil Nadu. Each millilitre of Darzamol contains Metronidazole (IP) 50 mg. 
in water for injection, JP made isotonic with Dextrose. The assessment years 
in question are 1982-1983 to 1984-1985. Jn the Assessment Year 1982-83, 
E the assessee filed classification list 7/1982 claiming exemption under 
Notification No. I 16/69, dated 3.5.1969, in respect of the said drug. The 
classification list was approved and exemption was allowed. 
On the ground that during the course of verification it was noticed that 
Darzamol Injection J.V. contained Dextrose apart from Metronidazole and 
F that the ingredient Dextrose was not a pharmaceutical necessity and also not 
therapeutically inert and, therefore, the assessee was not eligible for the benefit 
of exemption Notification I I 6/69, a show cause notice was issued to it on 
February 26, 1985. The notice, inter alia, stated that the assessee suppressed 
the fact that Darzamol Injection contained Dextrose and that it was not declared 
G to the department with deliberate intention to evade the payment of duty by 
claiming exemption under Notification 116/69. The assessee was called upon 
to show cause why the exemption should not be withdrawn and the duty, 
paiticulars of which were given in the notice, should not be demanded; it 
was asked to produce along with the cause all evidence on which it intended 
to rely. The assessee replied to the said notice stating that Dextrose was a 
H nutrient and it had no therapeutic properties and that it was us

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