Customs, Excise and Gold Tribunal - Mumbai
Nicholas Piramal India Ltd. vs Commissioner Of C. Ex. on 10 March, 1998
Equivalent citations: 1998(101)ELT314(TRI-MUMBAI)
ORDER K.S. Venkataramani, Member (T)
1. The Appellants are engaged in manufacture of Patent and Proprietary medicaments classifiable under Chapter 30 of the Central Excise Tariff Act, 1985. They manufacture a product called Neo-Mercazole based on bulk drug Carbimazole. They claimed exemption under Notification 29/88 which provides for concessional rate of duty of P & P medicines which are single ingredient and based on bulk drugs specified in Schedule II to Drug Price Control Order 1988. Proceedings were initiated against the Appellants by issue of show cause notice on 30-3-1993. The case of the department is that bulk drug Carbimazole has been deleted from the Second Schedule of the DPCO vide Notification No. 90,524(E)/ dated 5-7-1989. Therefore the Appellant's product Neo-Mercazole is not eligible for the concessional rate of duty. The show cause notice sought to recover the duty for the period 12-2-1990 to November 1990. It was also alleged that they filed price list dated 12-2-1990 in part HI for the product claiming discount 15% on retail price under Notification 245/83 being not entitled to the 15% discount benefit. Duty demand of Rs. 2,69,473/- was made by the show cause notice. The Commissioner of Central Excise, Mumbai-III adjudicated the matter after considering their defence and confirmed the demand and imposed a penalty of Rs. 1,000/- on the Appellants. He held that the Appellants had deliberately suppressed the facts of deletion of the bulk drug from the DPCO Schedule in order to evade proper Central Excise duty on their product.
2. Shri Vijay Agarwal, the learned Chartered Accountant pleaded that the show cause notice has been issued for the period February, 1990 to November 1990 alleging suppression of facts and it is dated 3-3-1993. The notice is hit by limitation because it has been issued after 6 months period under Section 11A of Central Excise Act, 1944. The learned Chartered Accountant urged that the appellants have filed classification list on 12-2-1990 and claiming the exemption under the Notification 29/88 and it has been duly approved by the jurisdictional Assistant Commissioner under Rule 173B of the Central Excise Rules. The proper officer is to approve the classification list only after making such enquiry as it deem fit and the learned Chartered Accountant also relied upon the decision of the Tribunal, in the case of Collector v. Muzzafarnagar Steels - 1989 (44) E.L.T. 552, that while approving the classification list the Assistant Commissioner is required to apply his mind before according approval and is required to make such enquiry and call for such information in order to grant approval to the classification claimed. Further it was contended that there was an earlier show cause notice issued on identical grounds to deny exemption on 3-7-1991 by the Superintendent to show cause to the jurisdictional Assistant Commissioner. It covered the period December 1990 to April 1991 and he did not allege any suppression of facts by the Appellants. Therefore to make such an allegation in a subsequent show cause notice issued in 1993 for a period earlier to that covered by the show cause notice of July 1991 will not support the department's case for invoking the longer period on grounds of suppression of facts by the Appellants. For this proposition the learned Chartered Accountant relied upon the Tribunal decision in the case of Neyveli Lignite Corporation v. Collector 1992 (58) E.L.T. 76 wherein the Tribunal held that extended period under Section 11A should not be applicable for demand for subsequent period raised under normal limitation period and demand for earlier period is raised subsequently. In this case the learned Chartered Accountant pointed out that even the earlier demands was partly beyond the 6 months, yet the Appellants to show their bonafide have accepted and paid the duties so demanded in the earlier show cause notice. This would go to support their arguments that there was no suppression of facts with intent to evade payment of duty.
3. Shri D. Gurnard, the ld. DR referred to the classification list dated 12-2-1990 and pointed out that the appellant have significantly omitted to declare the name of the ingredient so as to give the Assistant Commissioner no clue for making any further enquiry. They have also got approved price list claiming Notification 245/89 on the same suppressed facts without revealing the deletion of their product from the Schedule II of the DPCO by notification dated July 1989. There was thus sufficient ground to allege suppression of facts because only if they have made full disclosure of the particulars the Assistant Commissioner will be in a position to carry out enquiries which are expected of him. The ld. DR also referred to the reasoning in the impugned order on limitation whereby the Commissioner has found that the Appellant have declared in their classification list, a position which was not legally true.
4. We have carefully considered these submissions. We are of the view that the Appellants have made out a case on limitation because the earlier show cause notice of 1993 was on an identical ground to the effect that they could not avail Notification 29/88 after deletion of the ingredient used by them from category II of the DPCO. The present show cause notice, which has been disposed of by the impugned order, has been issued much later in 1993 again on the same ground for a period anterior by the earlier show cause notice. In these circumstances the Appellant's reliance on the Neyveli Lignite Corporation decision of the Tribunal would support their case. In this case also the arguments of the Appellant is well founded that the department could have raised the demand for earlier period even in 1991 July when the first show cause on the same ground came to be issued. The other decision of the Tribunal in the case of Muzzafar Nagar Steels also has laid down that the Assistant Commissioner has to make the necessary enquiries regarding the particulars disclosed in the classification list before according approval, and before us it was also submitted that it was also the practice of the Central Excise authority to verify with the Drug Price Control authorities before such classification list were granted approval. In these circumstances the conduct of the Appellant also has to be considered whether the suppression should have been with an intention to evade payment of duty. Reference in this context is made to their conduct in having paid the total duty demand in the earlier show cause notice for 1991 July which also was partly beyond the 6 months. They never raised the contention of time bar beyond 6 months while paying the duty. Therefore we hold that the Appellant is made a case on grounds of limitation and in this view of the matter we allow the appeal.