Customs, Excise and Gold Tribunal - Tamil Nadu
Vera Laboratories Ltd. vs Commissioner Of Central Excise, ... on 12 September, 2001
JUDGMENT
Jeet Ram Kait
1. These are four appeals against Order-in-Original No. 58-61/2000 dated 17.1.2000 in which the Commissioner has confirmed the demand raised against M/s. Vera Laboratories for a sum of Rs. 1,40,90,809/- Rs. 2,51,028/-, Rs. 2,52,442/- and Rs. 2,75,278/- as per the show cause notice for the period 10/94 to 6/99, 7/99 to 9/99, 10/99 to 12/99 and 1/2000 to 3/2000 respectively under Section 11A of the Central Excise Act 1944. He has also made Vera Laboratories liable to pay interest @ 24% per annum on the amount of Rs.1,48,69,557/- for the period starting from the first day of the month succeeding the month in which the duty as aforesaid ought to have been paid till the date of payment of duty as provided under Section 11AB of the Central Excise Act, 1944. He has also imposed statutory penalty of Rs. 1,58,69,557/- under Section 11AC of the Central Excise Act 1944 and another penalty of Rs. 10,00,000/- under Rule 173Q (1) of the Central Excise Rules 1944.
2. Ld. Counsel has submitted that the maximum price was fixed by the Drug Price Control Order (DPCO) and since they have sold at a price lesser than the maximum price, the transaction value should be accepted. He has also stated that the facts in the case of Aluminium Industries Ltd. v. CCE [1998 (04) ELT 486-SC] were different where the normal price was fixed by a notification and in the cases where prices are fixed by notification, in those cases only it created a legal fiction, whereas in their case, it is the maximum price and they cannot charge any price more than that maximum price fixed by the DPCO. Therefore, the Tribunal judgment in their case rendered in the case of Orchid Chem & Pharmaceuticals Ltd. v. CCE, Chennai-III reported in 2000 (119) ELT 485-Trib. is fully applicable in this case. The findings of the Ld. Commissioner that Boards' Circular No. 31/1/75 - CX dated 8.8.75 is not binding is also not proper as the Ld. Commissioner is bound to follow the departmental clarification, specially the circulars issued by CBEC in view of the Apex court judgment rendered in the case of Ranadey Micro Nutrients v. CCE as reported in 1996 (87) ELT 19-SC. The Ld. Commissioner was also bound to follow the judgment rendered by the Tribunal in the case of Archid Chem & Pharmaceuticals Ltd. (supra) in view of the Apex Court judgment rendered in the case of UOI v. Kamalakshi Finance Corporation Ltd. reported in 1991 (55) ELT 433-SC and it is not proper on his part to say that the Tribunal has not applied the judgment of the Hon'ble Apex Court rendered in the case of Aluminium Industries Ltd. v. CCE (supra). He submits that in that case the price control was fixed in the notification whereas this case relates to where the maximum price has been fixed which is not required to be exceeded.
3. Shri Soundararajan, Ld. DR while reiterating the findings recorded by the Commissioner has mentioned that the decision of the Tribunal in the case of Orchid Chem & Pharmaceuticals has been appealed against by the department. He has stated that since they have gone to Supreme Court and since in the case of Aluminium Industries Ltd. v. CCE, there is a legal fiction where price fixed under law in force has to be treated as the normal price of the goods, the maximum price fixed by the DPCO has to be taken as the normal price for assessment purpose.
4. We have considered the submission made by the Ld. DR and the Ld. Counsel and we find that the findings recorded in para 7 & 8 in the case of Archid Chem & Pharmaceuticals ltd. (supra) deals with the points raised by the departmental representatives before CEGAT and findings recorded by Ld. Commissioner that CEGAT has not looked into the contentions of the Revenue is totally incorrect. Para 7 & 8 of order in the case of Orchird Chem & Pharmaceuticals Ltd. are extracted herein below:-
7. On a detailed and careful consideration of the rival submissions as well as the records of the case, we are of the considered view that there is substantial force in the submissions of ld. Advocate that the appellants have established, on a prima facie consideration, that they have a strong case in their favour for the following reasons:-
(a) The DPCO prescribes a maximum sale price and in view the submissions noted above, we are of the prima facie view that there is nothing in law which prevents the appellants to sell their bulk drugs at a price lower than maximum price prescribed by DPCO.
(b) We are also of the prima facie considered view that Section 4(1)(a) Proviso (ii) would apply to situations where the price is a statutorily fixed price, that is to say that every manufacturer of that commodity would be forced by law to sell only at that price. In the present case, the DPCO order does not establish such a situation. It only fixes a maximum ceiling price. Therefore, the legal fiction created by the proviso would apply only to statutorily fixed price and not to ceiling price, otherwise the legal fiction created would render contra to the provisions to Section 4(1)(a) itself.
(c) This very view had been taken by the Board of Customs and Excise in their Circular of 1975 (supra). On a prima facie consideration, in view of the decisions of the Hon'ble Apex Court in the case of Ramadey Micronutrients ltd. and Paper Products (supra), this Circular is binding on the department. In their comments, dated 2-2-2000 (supra) the Office of the ADG, Anti-evasion, Chennai have also conceded that the said Circular, dated 8-8-1975 of the Board is still inc urgency as no order rescinding the order or cancelling this Circular was received. Therefore, we find that held. Commissioner has erred in the order impugned by declining to follow the said Circular on the grounds that it was not in consonance with statutory law. The pronouncements of Hon'ble Apex Court is to the contrary and therefore the Order-in-Original does not follow the decisions of the Hon'ble Apex Court in this regard.
(d) The letter of the Under Secretary of the Board asking Field officers to hold in abeyance any recovery action with respect to the drug mentioned under DPCO that was in the context of Pencilling-G, but on a prima facie consideration, the ratio of the same would also apply to other bulk drugs. In this connection, we also note that no other Commissionerate has adjuciated the numerous show cause notices which have been issued throughout the country on this matter.
(e) We also find that since the appellants harboured a bona fide belief that in view of the said Circular of 1975, the assessable value would not be the maximum price of DPCO but the normal price in terms of Section 4, therefore on a prima facie consideration, they have demonstrated that the extended period may not be invocable in this case.
8. In view of the aforesaid anlayse and findings, we are of the clear prima facie view that the appellants having demonstrated that they have a very strong case in their favour both on merits as well as on limitation and also because the Order-in-Original impugned has taken up a position which is totally inconsistent to two judgments of the Hon'ble Apex Court as discussed above, therefore the interest of justice would require that the entire duty, penalty and interest be waived and recovery thereof stayed. Further, since the matter lies on a short compass, we proceed to consider the appeal itself. We have already noted above that the Order-in-Original impugned has flouted the decisions of the Hon'ble Apex Court to the effect that the ruling of the Board should be followed and cannot be brushed aside on grounds of being inconsistent with other statutory provisions. Therefore, we consider the validity of the said order impugned and are compelled to set aside the same. We remand the matter to the Original Authority for a de nono consideration of the entire matter on the basis of the said Board's circular of 1975 taking into consideration also the letter, dated 23-12-1998 as well as the judgments of the Supreme Court in the cases of Randay Micronutrients and Paper Products Ltd. (supra). It is hereby clarified that the matter is remanded to the Original Authority on an open de novo basis and he shall consider the representations from the assessees as well as from the Revenue at the appropriate time when he would be required to adjudrate upon his matter. The appeal succeeds by way of remand accordingly and the Stay application is also disposed of in above terms.
5. On a reading of the above judgment, the Tribunal has categorically stated that in the light of the Apex Court judgment rendered in the case of Ranadey Micronutrients and Paper Products case (supra), the Board's Circulars are binding on the department officials. In the present case the Ld. Counsel clearly distinguished the judgment of India Aluminium Industries case, where the statutory price had been fixed, while in the present case, only maximum price has been fixed, therefore the Boards has clearly issued instructions in the Circular which is binding on the Executive Commissioner. We are not in a position to agree with the Ld. Commissioner's finding that the CEGAT has not appreciated the Revenue's point and that he is not bound by the Board's Circular. His finding is against the judicial discipline in view of the Apex Court judgment rendered in the case of UOI v. Kamalakshi Finance Corporation Ltd. cited supra. As the issue is fully covered by the judgment of Orchid Chem & Pharmaceuticals Ltd. case and Board's Circular, we are constrained to grant waiver of pre deposit of duty and penalties and take up the appeals themselves for final disposal as the issue is no longer res integra.
6. The appellants' appeals are required to be allowed with a clear direction that the Revenue should proceed to decide the case only in the context of the Board's Circular and in terms of Tribunal's judgment rendered in the case of Orchid Chem & Pharmaceuticals Ltd. Hence, the appeals are allowed. Ordered accordingly.
(Pronounced & dictated in open Court)