Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 16 July 2026

Case Overview

  • Parties: Hicure Pharmaceuticals Pvt. Ltd (appellant) vs Commissioner of Central Excise, Karnataka (respondent).
  • Appeals: Civil Appeal Nos. 6612‑6613/2012 challenging High Court orders dated 18 Aug 2011 and 19 Nov 2011.
  • Background: Assistant Commissioner, Hubli order dated 30 Nov 2005 covering Jan 2001‑Sep 2003 found in‑house sample value Rs 2,09,301 and levied excise duty Rs 33,488; demand of Rs 6,226 for samples sent to outside laboratories.
  • Appellant appealed to Commissioner of Central Excise (Appeals), Mangalore; order upheld. Tribunal (Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, Bangalore) set aside the adjudicating order, allowed the appeal and directed a refund of Rs 1,29,453.
  • Respondent issued show‑cause notice on 25 Jul 2008 for recovery of the refunded amount and filed an appeal under Section 35G of the Central Excise Act before the High Court of Karnataka.
  • High Court allowed the respondent’s appeal, relying on ITC Ltd vs Collector of Central Excise (2003) and CBEC Supplementary Instructions Chapter 11, holding that samples cleared for testing without proper records must be treated as goods removed for home consumption.
  • High Court findings (para 11‑12) emphasized that the fact of sample clearance was undisputed but no accounts of value were maintained; therefore, under the ITC judgment, the samples are deemed home consumption.
  • CBEC Supplementary Instructions (effective 1‑Sep‑2001, Chapter 11) categorise samples for testing, preservation, external labs, and government test centres, and require the assessee to maintain a proper account of receipt and utilisation, prepare invoices under Rule 11, and pay appropriate duty unless exempted.
  • The Supreme Court observed that non‑maintenance of records justifies levying excise duty; the Tribunal’s view that goods become marketable only after in‑house testing cannot prevail where records are absent.
  • The Court rejected the appellant’s argument that Section 35G appeal was not maintainable, confirming it fell within the provision.

Final Outcome

  • The Supreme Court dismissed the appeals, upholding the High Court orders of 18 Aug 2011 and 19 Nov 2011.
  • No order as to costs was made.
  • Any pending applications, if any, were ordered disposed of.

Topics: Excise Duty, Pharmaceutical Regulation