2005 (10) TMI 455 - AT - Central Excise

Summary

Issues:
Classification of pharmaceutical products as bulk drugs for concessional rate of duty under Notification No. 31/88-C.E. and 47/92, limitation period for duty demand, suppression or mis-declaration of facts with intent to evade payment of duty.

Classification of Pharmaceutical Products:
The appellants, engaged in manufacturing bulk drugs and pharmaceutical products, cleared certain items claiming concessional duty rates under specific notifications. The department issued a show cause notice proposing duty recovery, interest, penalty, and confiscation, contending that the items were not bulk drugs. The Addl. Commissioner dropped the demand for one item but upheld it for the remaining three, citing the suffix "Tech" as a reason for not considering them bulk drugs. The Commissioner (Appeals) affirmed this decision. The appellants contended that they correctly described the products in classification lists as technical grade, thus not suppressing any information. The Tribunal found that the appellants had consistently declared the products as technical grade in the classification lists, leading to no intent to evade duty. Consequently, the Tribunal set aside the duty demand and penalty, ruling in favor of the appellants.

Limitation Period for Duty Demand:
The Tribunal decided to dispose of the appeal based on the ground of limitation without delving into the merits of the demand. The appellants had consistently filed classification lists and declarations correctly describing the products as technical grade eligible for concessional duty rates under the relevant notifications. As the classification lists were approved over time, the Tribunal concluded that the demand was time-barred as the appellants had not suppressed any information or mis-declared facts to evade duty. Therefore, the Tribunal set aside the duty demand and penalty, ruling in favor of the appellants.

Suppression or Mis-declaration of Facts:
The Tribunal found that the appellants had accurately described the disputed products in the classification lists as technical grade, demonstrating no intent to evade duty. As there was no suppression or mis-declaration of facts by the appellants, the Tribunal held that the demand was barred by limitation. Consequently, the duty demand and penalty were set aside in favor of the appellants, emphasizing that the ingredients of the proviso to Sec. 11A(1) were not applicable in this case.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal on the grounds of limitation and lack of intent to evade duty through suppression or mis-declaration of facts. The decision favored the appellants, emphasizing their consistent and accurate classification of products in the relevant lists, leading to the dismissal of the duty demand and penalty.