Custom, Excise & Service Tax Tribunal
Concept Pharmaceuticals Limited vs Cce Aurangabad on 21 August, 2018
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.
APPEAL No.E/1216 & 1217/2008
(Arising out of Order-in-Appeal No.JAK(228-229) 89 & 108/08 dated
08/08/2008 passed by the Commissioner of Customs & Central
Excise, Aurangabad)
Concept Pharmaceuticals Ltd., : Appellant
VS
Commissioner of Customs & Central Excise : Respondent
Aurangabad Appearance Shri.D.R. Gadekar, Advocate for Appellant Shri.N. N. Prabhudesai, Supdt. (A.R) for respondent CORAM:
Hon'ble Shri S K Mohanty, Member (Judicial) Hon'ble Shri P Anjani Kumar, Member (Technical) Date of hearing : 21/08/2018 Date of decision : 21/08/2018 ORDER NO. A/87334-87335/2018 Per : Shri S K Mohanty
1. These appeals are directed against the impugned order dated 08/08/2008 passed by the Commissioner of Customs & Central Excise, Aurangabad.
2. Brief facts of the case are that the appellant is engaged in the manufacture of P&P Medicines, falling under Chapter Heading No.3003 2 Appeal No.E/1216 & 1217/2008 of Central Excise Tariff Act, 1985. During the disputed period, the appellant failed to pay appropriate Central Excise duty in respect of free quantity of medicines supplied to its distributors. On scrutiny of the records, the department had observed that the appellant had contravened the provisions of Section 4A of the Central Excise Act, 1994 read with Rule 4 of Valuation (Determination of Price of Excisable Goods) Rules, 2000 and Rule 4, 6, 8 of the Central Excise Rules, 2002.
Accordingly, show-cause proceedings were initiated against the appellant, which culminated into the adjudication order. The appellant had deposited entire duty amount under protest. While adjudicating the show-cause notice, the original authority had confirmed the Central Excise demand along with interest and also imposed equal amount of penalties under Section 11AC of the Central Excise Act, 1944. The interest amount for delayed payment of Central Excise duty was also paid by the appellant subsequently. Aggrieved by the adjudication order, the appellant had preferred appeal before the Commissioner (Appeals), assailing that invocation of Section 11AC of the Central Excise Act, 1944 is not proper and justified for imposition of penalty on the appellant. However, the learned Commissioner (Appeals) vide impugned order has upheld the adjudication order. Hence, these appeals were preferred before the Tribunal.
3. Learned Consultant appearing for the appellant refers to the letter dated 20/04/2006, addressed to the Jurisdictional Range Superintendent, conveying that no excise duty is chargeable on the quantity discount provided to its customer as per the marketing strategy. Thus, he submits that the ingredients mentioned in Section 3 Appeal No.E/1216 & 1217/2008 11AC of the Act are absent in the case of the appellant for imposition of penalty.
4. On the other hand, learned AR appearing for the Revenue reiterates the findings recorded in the impugned order. He further submits that since the decision of this Tribunal in the case of Vinayaka Mosquito Coil Mfg. Co. - 2004 (174) ELT 107 (Tri-Bang) was wrongly cited by the appellant in its letter dated 20/04/2006 addressed to the Jurisdictional Range Superintendent, the intention to defraud Government revenue is established inasmuch as such decision has no bearing to the fact of the case. Thus, he submits that invocation of the provisions of Section 11AC of the Act for imposition of penalty is proper and justified.
5. Heard both sides and perused the records.
6. The issue involved in these appeals for consideration by the Tribunal is whether, penalty can be imposed under Section 11AC of the Act and whether there is element of fraud, collusion, willful mis- statement of facts, etc. in defrauding the Government revenue by the appellant. The letter dated 20/04/2006 addressed by the appellant to the Jurisdictional Range Superintendent is relevant for consideration of the present issue, which is extracted here-in-below:
"The Superintendent Central Excise & Customs Town Range-IV N-5, CIDCO Town Centre Aurangabad 4 Appeal No.E/1216 & 1217/2008 Sub: Free offers to our Customers Sir, This is to inform you that we give some quantity discount to our customers as per marketing strategy. Since these are quantity discounts, excise duty is not chargeable. This is as per the judgment held in Vinayaka Mosquito Coil Mfg. Co. Vs. CCE, Bangalore reported at 2004 (174) ELT 107 (Tri- Bangalore) in support of this procedure (copy enclosed). We are enclosing the list of the products on which we offer quantity discounts to our customers. This is for your information and record please. If there is any doubt or objection in our procedure, please inform us. Thanking you, Yours faithfully, For Concept Pharmaceuticals Lt.d Sd/-
(Authorised Signatory)"
7. On perusal of the above letter addressed by the appellant, it transpires that the appellant entertained a bonafide belief that no Central Excise duty is payable on the quantity discount provided to its customers for supplying of the goods. Section 11AC of the Act provides for imposition of penalty, only when the ingredients, viz., fraud, collusion, suppression of facts, etc. are present in defrauding the Government revenue. In the present case, since the appellant entertained a genuine and bonafide belief at the material time and paid the differential amount of duty along with interest subsequently, we are of the considered view that the provisions of Section 11AC of the Act cannot be invoked for imposition of penalty on the appellant. 5
Appeal No.E/1216 & 1217/2008
8. Therefore, the impugned order, to the extent it imposed penalty on the appellant is set aside and the appeals filed by the appellant are allowed to such extent.
(Pronounced and dictated in court)
(P Anjani Kumar) (S K Mohanty)
Member (Technical) Member (Judicial)
PJ