Customs, Excise and Gold Tribunal - Mumbai
Hindustan Ciba Geigy Ltd. vs Cce on 25 May, 1999
Equivalent citations: 2000(99)ECR705(TRI.-MUMBAI)
ORDER S.S. Kang, Member (J)
1. Appellant filed this appeal against the Order-in-Original dated 26.3.1993 passed by the Collector of Central Excise, Bombay-II.
2. Brief facts of the case are that appellants are engaged in the manufacture of P & P Medicines falling under Chapter 30 of the Central Excise Tariff Act, 1985. Appellants filed classification list in respect of control samples of P & P Medicaments and claimed exemption under Notification No. 171/70 dated 21.11.1970.
3. A show cause notice was given to appellants alleging that appellants were not entitled for the benefit of Notification No. 171/70-CE as they had not fulfilled the conditions of the notification. The Collector of Central Excise vide impugned order confirmed the demand on the ground that samples were not distinctly different from the regular trade packing. A penalty of Rs. 5000/- was also imposed under 173Q of Central Excise Rules.
4. Learned Advocate appearing for appellants submits that appellants had clearly complied with the conditions of the Notification No. 171/70-CE as the packing of samples clearly indicated the stamp i.e. control sample - not for sale. He submits that hence the samples were distinctly different from the regular trade packing.
5. He further submits that under Rule 78(m) of the Drugs & Cosmetics Act the manufacturer of Pharmaceutical preparation required to maintain a reference sample, from each batch of the product. The control samples are drawn from the manufacturing line and the same was marked as Control Sample not for sale. He therefore, submits that appellants substantially complied with the conditions of notification.
6. Learned Advocate also submits that demand is time barred as show cause notice for the period 1.4.1987 to March, 1991 was issued on 27.3.1992. He submits the process of taking sample was in the notice of the Revenue. The classification list claiming exemption was duly approved by the Competent authority. The appellants have filed the Daily production reports for their samples which was duly noticed by the respondents, hence the extended period of limitation is not applicable to the facts of the present case. For this he relied upon the decision of the Tribunal in the case of Indian Drugs and Pharmaceuticals Limited v. C.C. reported in 1987 (37) E.L.T. 829 : 1987 (13) ECR 85 (T). He, therefore, submits that appeal be allowed.
7. Shri Satnam Singh, Senior Departmental Representative submits that the Notification No. 171/70-CE provides that samples are to be packed in a form distinctly different from regular trade packing and also be marked sample not for sale. He submits that samples in question were not distinctly packed as from the trade packing, hence the conditions of notifications were not Complied with. He further submits that the appellants suppressed the manner of drawal, Packing & Preserving of Control sample as the same was not disclosed to the department. Hence the extended period of limitation is rightly invoked in the present case.
8. Heard both sides.
9. The contention of the appellants is that whole of the demand is time barred. Show cause notice was issued on 27.3.1992 for the period 1.4.1987 to March, 1991. The appellants filed the classification list claiming the exemption under Notification No. 171/70 and the same was approved on 23.12.1987. The contention of the appellants is that they were filing Daily Production Reports in respect of their samples. The Tribunal in the case of Indian Drugs and Pharmaceuticals Limited v. Commissioner of Central Excise held that in such a situation there was no clandestine removal of the samples and no suppression or mis-statement of facts can be alleged against the assessee. In Para-8 of the Judgment of the Tribunal held as under:
The longer time limit for 5 years for raising demand of duty cannot be invoked in this case as there was no clandestine removal of the sample packs nor any suppression or wilful mis-statement of facts by the appellants is proved. They filed classification list claiming the benefit of exemption Notification in respect of the samples and the classification lists were approved. They also filed RT-12 Returns with Gate Passes and no objection was raised thereon. Samples were called for by the Assistant Collector on 30.6.1981, but the show cause notice demanding duty was issued on 10.8.1982 i.e., after more than one year. The appellants were not expected to furnish more details in the classification lists. They declared the Physician's samples, and claimed the exemption under the Notification No. 48/77-CE. The proper officer could verify the facts by inspection of the samples in time. Having failed to do so, the appellants cannot be charged for clandestine removal or suppression of facts or wilful mis-statement, when they filed classification list and R.T.-12 Returns regularly and the same were approved. They were not expected to give more details in the above documents as they were under the belief that they satisfied the condition of Notification by marking the sample packs with the words "Physician's samples, not for sale" although such belief was not correct.
10. In view of the above discussed facts we find that ratio of the above decision of the Tribunal is fully applicable in the present case. Hence without going into the merit of the case we find that whole of demand is time barred.
11. Hence we set aside the impugned order and allow the appeal.
Sd/-
(S.S. Kang) Member (J) Separate Order (S.K. Bhatnagar) President Sd/-
(V.K. Agarwal) Member (T) S.K. Bhatnagar, President
12. I observe that the basic issue involved in this case was as to whether the appellants were entitled for the benefit of Notification No. 171/70 in respect of the samples which were not meant for sale. It is the Department's stand that they had not complied with all the conditions inasmuch as the samples were not cleared in a packing distinctly different from the regular trade packing. Whereas the appellants have said that they had clearly indicated this distinction by stamping the words "control sample - not for sale" on the packing and therefore complied with all the conditions.
13. They have also raised the issue of time bar. I observe that it is already a settled point of law that merely marking a sample that they were control sample or sample for physician (and not for sale) was by itself not sufficient and it is the packing which has to be distinctly distinguishable. In so far as the time bar is concerned the point which emerges is whether the appellants had placed all the cards on the table. In this respect they had drawn attention to the classification list claiming exemption and filling of daily production reports.
14. In my opinion, it is by itself not sufficient as this does not give any indication as to whether the samples were in a distinctly distinguishable packing.
15. A claim under Notification No. 171/70 would raise a presumption but does not constitute an evidence unless, of course, the samples were enclosed with the classification list or any other communication for that matter. In the classification list itself one may or may not claim the benefit of a particular notification but if he claims the fact that he satisfies all the required conditions is a matter regarding which the burden initially lies on the claimant to show by production of necessary evidence that his claim was justified. Once an assessee has forwarded the samples and then the Department sleeps over it and does not care to verify then it has to face the consequences. Further, in my opinion, claiming the benefit of a notification but not complying with its conditions consciously or deliberately amount to an attempt to mislead the Department.
16. Now, even at this stage, there is no denial of the charge on merit with reference to the aspect of distinctly different packing; and mere assertion that they had stamped the trade packing with the words noted above was not sufficient. In these circumstances, in my opinion, the demand was not time barred. Appellants have relied upon the Tribunal decision in the case of Indian Drugs & Pharmaceuticals Ltd. (supra) in support of their case. However, it is noteworthy that in the said case samples had been submitted but the show cause notice was issued more than one year after such submission and, therefore, it is not surprising that the Tribunal held that the demand as time barred. In the present case, there is no such evidence or even averment whether the samples were submitted at any stage. Therefore, I uphold the order passed by the Collector and reject the appeal.
Pronounced on 25.5.1999.