The CESTAT, Delhi bench, in its recent order, granted relief to The Himalaya Drug Co., and held that semi-finished granules, extracts and oils produced by them from various parts of herbs cannot be subject to Excise Duty since such goods are not marketable.
Appellants engaged in the manufacture of patent or proprietary Ayurveda medicaments and preparations, produced semi-finished granules, extracts and oils from various parts of herbs like barks, flowers, fruits roots, leaves etc.
The department entertained a view that the goods prepared in the factory are marketable and therefore, levied excise duty on the same.
The appellants argued that as per the drug license issued, the factories at Delhi and Dehradun cannot sell their products to anyone else. Moreover, they are in the nature of intermediary goods and therefore, cannot be termed as marketable.
Citing an earlier order of the Tribunal, on a similar issue, the division bench said that the demand is not sustainable.
In its earlier order, the Tribunal had observed that 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.”
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