Custom, Excise & Service Tax Tribunal
Vitamax Health Care Pvt Ltd vs Commissioner Of Customs Central Excise ... on 28 July, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH,
COURT NO. I
EXCISE APPEAL NO. 55206 OF 2023
[Arising out of the Order-in-Appeal No. IND-EXCUS-000-APP-110 to
111/2022-23 dated 06/03/2023 passed by The Commissioner (Appeals),
CGST, Customs & Central Excise, Indore (M.P.).]
M/s Vitamax Health Care Pvt. Ltd. ......Appellant
Plot No. 1101, Sector - III,
Pithampur Industrial Area,
Pithampur, Distt. - Dhar.
Versus
Commissioner (Appeals), ....Respondent
CGST, Customs & Central Excise,
Manik Bagh Palace,
Indore (M.P.).
AND
EXCISE APPEAL NO. 55061 OF 2023
[Arising out of the Order-in-Appeal No. IND-EXCUS-000-APP-110 to
111/2022-23 dated 06/03/2023 passed by The Commissioner (Appeals),
CGST, Customs & Central Excise, Indore (M.P.).]
Shri Shailendra Jain, Director,
M/s Vitamax Health Care Pvt. Ltd. ......Appellant
Plot No. 1101, Sector - III,
Pithampur Industrial Area,
Pithampur, Distt. - Dhar.
Versus
Commissioner (Appeals), ....Respondent
CGST, Customs & Central Excise,
Manik Bagh Palace,
Indore (M.P.).
APPEARANCE:
Dr. Arvind Singh Chawla, Advocate for the appellant.
Shri Ratnesh Kumar Mishra, Authorized Representative for the
Department
CORAM:
HON'BLE JUSTICE MR. DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
FINAL ORDER NO'S. 51078-51079/2025
2 EX/55206 OF 2023 & other
DATE OF HEARING : 15.05.2025
DATE OF DECISION: 28.07.2025
P.V. SUBBA RAO
M/s. Vitamax Healthcare Pvt. Ltd.1 and its Director
Shri Shailendra Jain2, filed these appeals to assail the order-
in-appeal dated 6.3.20233 in which the order-in-original dated
4.11.20224 passed by the Assistant Commissioner was upheld
and the appeals filed by the assessee and Shri Jain were
rejected. In his OIO, the Assistant Commissioner confirmed
demand of Rs. 45,38,210/- as central excise duty on the
assessee under section 11A(4) the Central Excise Act, 19445
along with interest under section 11AA of the Act and imposed
penalty of Rs. 45,38,210/- under section 11AC of the Act and
Rs. 5,000/- under Rule 27 of the Central Excise Rules, 20026
on the assessee. He also imposed penalty of Rs. 45,38,210/-
on Shri Jain under Rule 26 of the Rules.
2. The facts which led to the issue of the OIO are that the
assessee was a manufacturer of pharmaceuticals but it was
not registered with the Central Excise department as it was
availing the benefit of exemption available to small scale
industries under Notification No. 8/2003-CE dated 1.3.2003.
Acting on intelligence, central excise officers searched the
1. assessee
2. Jain
3. impugned order
4. OIO
5. Act
6. Rules
3 EX/55206 OF 2023 & other
premises of one, M/s. Pharmasia, Indore and the residence of
its Director, Shri Jain. Pharmasia was the C&F agent of M/s.
Abott Healthcare Pvt. Ltd., Mumbai. During this search, it was
discovered that M/s. Vitamax Health care Pvt. Ltd (the
assessee in this appeal) was manufacturing medicines bearing
brand names of other entities but was not paying duty on
them.
3. Following up, officers investigated the assessee and
found that it was manufacturing pharmaceuticals with brand
names of other firms. Goods which bear the brand name of
others are not entitled to the benefit of exemption Notification
No. 8/2003-CE and there is no dispute about this legal
position. Paragraph 4 of the notification reads as follows:
―4. The exemption contained in this notification shall
not apply to specified goods bearing a brand name or
trade name, whether registered or not, of another person,
except in the following cases :-
(a) Where the specified goods, being in the nature of
components or parts of any machinery or equipment
or appliances, are cleared for use as original
equipment in the manufacture of the said machinery
or equipment or appliances by following the
procedure laid down in the Central Excise (Removal
of Goods at Concessional Rate of Duty for
Manufacture of Excisable Goods) Rules, 2001 ;
Provided that manufacturers, whose aggregate value
of clearances of the specified goods for use as original
equipment does not exceed rupees one hundred lakhs in
the financial year 2002-2003 as calculated in the manner
specified in paragraph 1, may submit a declaration
regarding such use instead of following the procedure laid
down in the said Central Excise (Removal of Goods at
4 EX/55206 OF 2023 & other
Concessional Rate of Duty for Manufacture of Excisable
Goods) Rules, 2001;
(b) Where the specified goods bear a brand name or
trade name of -
(i) The Khadi and Village Industries Commission; or
(ii) A State Khadi and Village Industry Board; or
(iii) The National Small Industries Corporation ; or
(iv) A State Small Industries Development Corporation;
or
(v) A State Small Industries Corporation;
(c) Where the specified goods are manufactured in a
factory located in a rural area‖.
4. Investigation also showed that some goods which were
manufactured by the assessee were preparations of
chloroquine which were anyway exempted from duty under
Notification No. 12/2012-CE dated 17.3.2012. After recording
statements and completing the investigation, a show cause
notice dated 3.8.2020 was issued to the assessee and to Shri
Jain proposing recovery of excise duty not paid invoking
extended period of limitation under section 11A(4) of the Act
along with interest under section 11AA and to impose
penalties. These culminated in the issue of OIO.
5. After examining every invoice under which the assessee
cleared the goods from 2015-2016 to 2017-2018 (upto June
2017), the Assistant Commissioner recorded the name of the
product, the brand owner, the quantity, rate, price and invoice
value for each and every invoice. He tabulated them in tables
on pages 6-13 of the OIO. Accordingly, he confirmed the
demand of excise duty with interest and penalties which has
5 EX/55206 OF 2023 & other
been upheld by the Commissioner (Appeals) in the impugned
order.
Submissions on behalf of the appellants
6. Learned counsel for the appellants made the following
submissions:
(i) A search on the website of the patents department
shows that many of the brands were not registered
and hence they cannot be called brand names of
other persons.
(ii) One of the brands ‗Ranemax' was the brand of the
assessee itself and hence the goods cleared under
this brand are eligible for exemption.
(iii) Medicines containing chloroquine were exempted
anyway by Notification No. 12/2012-CE and
therefore, no duty can be charged on them.
(iv) Therefore, the appellant cannot be said to be
manufacturing goods under a brand name. There is
no evidence in the OIO or in the impugned order that
the brand name of the customer was used.
(v) There is no evidence that the customers have
permitted the assessee to manufacture goods with
their brand name.
(vi) The burden of proof is on the one who alleges and the
department has not proved its case.
6 EX/55206 OF 2023 & other
(vii) The impugned order may be set aside the appeals
may be allowed.
Submissions on behalf of the Revenue
7. Learned authorized representative for the Revenue
vehemently supported the impugned order and submitted as
follows:
(i) There is no force in the submission of the appellants
that the brand names have not been registered with
the patent office and hence they cannot be called
brand names. Notification No. 8/2003 will not apply
to goods bearing a brand name or trade name,
whether registered or not, of another person.
(ii) The preparations containing chloroquine have already
been excluded while computing the demand.
(iii) The permission or licence from the brand name
owner is not required to determine if the goods are
eligible for exemption Notification No. 8/2003-CE or
not.
(iv) The impugned order is correct and balanced and calls
for no interference. It may be upheld and the appeals
may be dismissed.
Findings
8. We have considered the submissions advanced by both
sides and perused the records.
7 EX/55206 OF 2023 & other
9. The exemption provided to small scale industries based
on turnover under Notification No. 8/2003-CE is not available,
as per paragraph 4 of the notification read with Explanation
(A) to goods which bear the brand name of another person
(other than the assessee). This legal position is not in dispute.
10. It is not very difficult to determine if the goods bear the
brand name or not in case of pharmaceuticals because of the
nature of the industry. Pharmaceuticals are sold as bulk drugs
or as preparations. The appellant manufactured preparations.
Pharmaceutical preparations are sold either by their generic
names (e.g.; paracetamol) or brand names (e.g.; crocin,
Dolo). While the generic name is the scientific name of the
drug and is universally used, brand names are given by
various companies to identify their products and associate
them with their company. Every invoice of a pharmaceutical
manufacturer shows under what name the goods are sold. In
his OIO, the Assistant Commissioner examined every single
invoice and recorded the products which were sold along with
details. Clearly, they were sold on brand names and not on
generic names.
11. Learned counsel's submission is that there is no evidence
that the appellant had got any licence to put the brand names
of another company. This is not a requirement under
paragraph 4 of the Notification No. 8/2003-CE. If the appellant
manufactured and cleared goods with the brand name of
8 EX/55206 OF 2023 & other
another person without proper licence from that firm, it is a
matter of dispute between the parties. However, it does not
make such goods eligible for exemption under Notification No.
8/2003-CE.
12. Another submission of the appellant is that there is no
evidence that the brand names belonged to the customers and
in some cases, the products with the same brand names were
sold to more than one customer. Again, we find that the brand
name does not have to belong to the customer for the goods
to be excluded from the benefit of Notification No. 8/2003-CE.
It is sufficient if there is a brand name and it is of some other
person and not of the manufacturer.
13. Another submission of the appellant is that a search on
the website of the patents and copyrights office does not show
that all these brands have been registered. We find that
paragraph 4 of the notification excluded even goods bearing
unregistered brand names of others from the benefit.
14. Another submission of the appellant is that one of the
brand names ‗Ranemax' is the appellant's own brand. We find
that the demand on the Ranemax therefore, needs to be set
aside.
15. As far as the submission regarding preparations of
chloroquine being exempted anyway is concerned, we find that
9 EX/55206 OF 2023 & other
the demand has been confirmed excluding preparations of
chloroquine.
16. We also find that the appellant had not taken central
excise registration nor filed any returns. If the appellant knew
about the Notification No. 8/2003-CE which entitled him to the
exemption, it is evident that he would have read it and it is
unthinkable that he was not aware that goods bearing the
brand name of any other person were not covered by the
exemption. The appellant did not come clean about its
activities and it is the investigation which showed that the
appellant had been manufacturing goods with brand names of
others and not paying duty on them. Under these
circumstances, we find that extended period of limitation under
section 11A(4) was correctly invoked.
17. We find penalties were imposed on the assessee under
section 11AC of the Act and under Rule 27 of the Rules and on
Shri Jain under Rule 26 of the Rules. The relevant portions of
these provisions read as follows:
11AC. Penalty for short-levy or non-levy of duty in
certain cases.-- (1) The amount of penalty for non-levy
or short-levy or non-payment or short-payment or
erroneous refund shall be as follows--
(a) where any duty of excise has not been levied or
paid or has been short-levied or short-paid or erroneously
refunded, for any reason other than the reason of fraud or
collusion or any willful mis-statement or suppression of
facts or contravention of any of the provisions of this Act
or of the rules made thereunder with intent to evade
payment of duty, the person who is liable to pay duty
determined under sub-section (10) of Section 11-A shall
10 EX/55206 OF 2023 & other
also be liable to pay a penalty not exceeding ten per cent
of the duty so determined or Rupees Five thousand,
whichever is higher:
Provided that where such duty and interest payable under
Section 11-AA is paid either before the issue of show
cause notice or within thirty days of issue of show cause
notice, no penalty shall be payable by the person liable to
pay duty or the person who has paid the duty and all
proceedings in respect of said duty and interest shall be
deemed to be concluded;
(b) where any duty as determined under sub-section
(10) of Section 11A and the interest payable thereon
under Section 11AA in respect of transactions referred to
in clause (a) is paid within thirty days of the date of
communication of the order of the Central Excise Officer
who has determined such duty, the amount of penalty
liable to be paid by such person shall be twenty-five per
cent of the penalty imposed, subject to the condition that
such reduced penalty is also paid within the period so
specified;
(c) where any duty of excise has not been levied or
paid or has been short-levied or short-paid or
erroneously refunded, by reason of fraud or
collusion or any wilful misstatement or suppression
of facts, or contravention of any of the provisions of
this Act or of the rules made thereunder with intent
to evade payment of duty, the person who is liable
to pay duty as determined under sub-section (10) of
Section 11A shall also be liable to pay a penalty
equal to the duty so determined:
********
RULE 26. Penalty for certain offences.-- (1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or two thousand rupees, whichever is greater. Provided that where any proceeding for the person liable to pay duty have been concluded under clause (a)or clause (d) of sub-section (1) of section 11AC of the Act in respect of duty, interest and penalty, all proceedings in 11 EX/55206 OF 2023 & other respect of penalty against other persons, if any, in the said proceedings shall also be deemed to be concluded. (2) Any person, who issues -
(i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or
(ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater.
RULE 27. General penalty. -- A breach of these rules shall, where no other penalty is provided herein or in the Act, be punishable with a penalty which may extend to five thousand rupees and with confiscation of the goods in respect of which the offence is committed.
18. The penalty under section 11AC is a mandatory penalty imposable on the assessee if the non-payment or short payment of duty is due to fraud or collusion or wilful misstatement or suppression of facts with an intent to evade. In short, on the same grounds on which the extended period of limitation can be invoked under section 11A, penalty under section 11AC is imposable. Since we have found in favour of the Revenue on the question of extended period of limitation, we also uphold the penalty under section 11AC on the assessee.
19. Penalty under Rule 27 is imposable where no other penalty is provided. Since we found that the appellant was liable to penalty under Section 11AC of the Act, we do find it 12 EX/55206 OF 2023 & other any reason to also uphold penalty under Rule 27 on the assessee. This deserves to be set aside.
20. As far as the penalty under Rule 26 on Shri Jain is concerned, we find that this Rule provides for penalty under two situations - (a) some goods have been rendered liable for confiscation and the person has done or omitted something which rendered the goods liable for confiscation; and (b) the person issued some invoices without supplying goods so as to enable the recipient to avail ineligible CENVAT credit. There is no confiscation of goods in this case nor is there any allegation of issue of invoices without supplying goods. Therefore, no penalty under Rule 26 should have been imposed on Shri Jain. The penalty imposed on Shri Jain under Rule26 needs to be set aside.
21. In view of the above, the appeals are disposed of as below:
(i) Excise Appeal 55206 of 2023 filed by M/s Vitamax Healthcare is partly allowed setting aside the demand on goods with brand name ‗Ranemax' owned by the assessee and upholding the rest of the demand. The matter is remanded to the Commissioner for the limited purpose of recomputing the duty as above.
The interest payable and the mandatory penalty under section 11AC shall also be recomputed 13 EX/55206 OF 2023 & other accordingly. The penalty imposed under Rule 27 is set aside.
(ii) Excise Appeal 55061 of 2023 filed by Shri Shailendra Jain is allowed and the penalty under Rule 26 imposed on him is set aside.
(iii) Both appellants will be entitled to consequential benefits.
(Order pronounced in open court on 28/07/2025.) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) PK