2005 (4) TMI 479 - AT - Central Excise

Summary

Issues:
1. Waiver of pre-deposit of duty and penalty arising from incorrect availing of benefit of Notification No. 245/83.
2. Barred by limitation defense based on regular filing of price lists and approval.
3. Application of Supreme Court judgment in Easland Combines for limitation period.

Analysis:
1. The judgment dealt with the application for waiver of pre-deposit of duty and penalty amounting to Rs. 49,81,952/- each, arising from the incorrect availing of the benefit of Notification No. 245/83 by the manufacturers of P & P medicines. The Commissioner of Central Excise (Appeals) confirmed the demand, alleging undervaluation of goods due to claiming a 15% discount on MRP, which was not specified in the Drug (Price Control) Order, 1979/1987, a condition of the Notification. The Tribunal considered the arguments presented by both sides regarding the incorrect availing of the benefit and the alleged undervaluation of goods.

2. The Tribunal found merit in the applicants' contention that the demand was barred by limitation. The applicants had been regularly filing price lists in Proforma III as required by Rule 173C read with Central Excise (Valuation) Rules, 1975, and these lists had been regularly approved. The Tribunal noted that the Supreme Court judgment in Easland Combines was relied upon by the lower Appellate Authority to justify raising the demand within the extended period of limitation. However, the Tribunal pointed out that the Supreme Court judgment clearly stated that a Central Excise Officer could serve a notice within one year from the relevant date in cases of short-levy or short-payment of duty, which was not done in the present case. Therefore, the Tribunal waived the pre-deposit and stayed the recovery pending the appeal.

3. The Tribunal's decision to waive the pre-deposit and stay recovery was based on the proper interpretation of the Supreme Court judgment in Easland Combines, highlighting the importance of issuing a show cause notice within the prescribed period for raising demands related to short-levy or short-payment of duty. By applying the legal principles established in the Supreme Court judgment, the Tribunal ensured that the demand in the present case was not valid due to the failure to issue a timely notice, thus upholding the applicants' defense of being barred by limitation.