2026-VIL-1425-CESTAT-CHE-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Manufacture and clearance of Nitrous Oxide I.P. - Eligibility for concessional rate under Sl. No.17 of Notification No.2/2011-CE - Appellant manufactured Nitrous Oxide I.P. (pharmacopoeia-grade anaesthetic) under valid drug licence and cleared to hospitals and licensed drug traders claiming concessional rate under exemption for anaesthetics - Department denied concession for supplies to traders alleging that appellant failed to establish goods were used exclusively for anaesthetic purposes and invoked extended period of limitation - Whether end-use condition can be read into Notification which contains product-based exemption for anaesthetics without prescribing end-use requirement - HELD - Anaesthetic is identified by pharmacological character and therapeutic function namely ability to produce loss of sensation and not by identity of purchaser or ultimate user - Nitrous Oxide I.P. conforming to pharmacopoeial standards and manufactured as medical anaesthetic has character as anaesthetic determined at stage of manufacture and clearance unless relevant exemption notification expressly introduces end-use condition - Sl. No.17 of Notification neither prescribes end-use condition nor requires any certification or verification thereof and such condition cannot be read into notification by implication. The eligibility determined on basis of description of goods at time of clearance and not their subsequent use - Central Excise is duty on manufacture and eligibility to exemption determined by nature and description of goods at clearance not by subsequent distribution or consumption. There is no statutory requirement in Central Excise law that exempt goods must be supplied directly to ultimate user - Once undisputed that goods cleared were Nitrous Oxide I.P. as anaesthetics covered by Sl. No.17 concession cannot be denied merely because purchaser is trader - Department's assumption that traders may divert goods for other uses purely speculative and legally irrelevant in absence of statutory end-use condition - Revenue failed to establish foundation fact of allegation that Nitrous Oxide I.P. sold to traders diverted for non-exempt purpose before onus shifted to appellant – The demand on merits unsustainable and extended period of limitation inapplicable – The impugned order is set aside and the appeal is allowed
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