Case Law Details

Case Name : M/s The Himalaya Drug Co. Vs. CCE (CESTAT Delhi)
Appeal Number : Excise Appeal No. 51260 of 2017
Date of Judgement/Order : 20/12/2017
Related Assessment Year :
Courts : All CESTAT (770) CESTAT Delhi (273)

M/s The Himalaya Drug Co. Vs. CCE (CESTAT Delhi)

The present appeal is filed by the assessee- Appellants against the Order-in-Original No. 08/Commr/DDN/2017 dated 08.02.2017 passed by the Commissioner of Central Excise, Dehradun. The period in dispute is April to December, 2015.

2. The brief facts of the case are that, during the period under consideration, the assessee- Appellants were engaged in the manufacture of patent or proprietary ayurvedic medicaments and preparations at Bangalore since 1975. The goods manufactured in Bangalore are classifiable as Ayurvedic Medicaments subject to Central Excise Duty. The assessee- Appellants have two other factories situated at Dehradun and New Delhi. In these factories, the raw materials, which are various parts of herbs like barks, flowers, fruits roots, leaves etc. are converted into granules, extracts and oils which are in a semi-finished stage. The grievance of the Department is that, the goods prepared in Delhi factory are marketable, so the excise duty was demanded. Being aggrieved, the assessee- Appellants have filed the present appeal.

3. With this background, we have heard Shri Daya Nand, learned counsel for the assessee- Appellants and Shri H.C. Saini, learned DR for the Department.

4. After hearing both sides and on perusal of the material available on record, it appears that an identical issue has come up before the Tribunal in the assessee- Appellants’ own case [Final Order No. 915-916/2005 dated 03.06.2005], wherein it was observed that :

“3. We have gone through the rival contentions. The proposal made in the show cause notice is for classification of the products in Chapter 13. However, the Commissioner has classified them under Chapter 30. The order is going beyond the scope of the show cause notice. On this ground alone, the OIO is liable to be set aside. As regards the merits of the case, the appellants have submitted that as per the drug license issued, the factories at Delhi and Dehradun cannot sell their products to any one else. In fact, they are in the nature of intermediary goods. They are semi-finished, they cannot be used as such. Under these circumstances, they cannot be held to be marketable. Moreover, even if duty is held to be payable on these products cleared at Delhi factory, CENVAT credit would be available at Bangalore Factory. In view of this there cannot be any intention to evade central excise duty. From the records, it is seen that there are no grounds for holding that the appellants have suppressed facts in order to evade payment of duty. In these circumstances, the OIO cannot be sustained. All the case laws relied on by the appellants are very relevant. The Board in it’s Circular dated 16-9-97 has clarified that the vegetable extracts which emerge at intermediary stage in the manufacture of Ayurvedic, Unani or Siddha medicines are not marketable unless subjected to preservative process. Therefore, such vegetable extracts unless subjected to preservative process are not liable to be considered as goods attracting excise duty. In view of the fact that there is specific prohibition to sell these goods to other buyers these goods cannot be compared with the products manufactured by others for sale. We have to consider the products at Delhi Unit only as intermediary goods. Therefore we hold that the impugned goods are not excisable. We also do not find any justification for invoking longer period. In view of the above finding, we allow the appeal with consequential relief if any.”

5. By following our earlier order (supra), we find no merit in the impugned order and the same is hereby set aside.

6. In the result, the appeal filed by the assessee Appellants is allowed.

(Dictated & pronounced in the open court)

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