2007 (11) TMI 476 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalty on pharmaceutical goods sold to Government Hospitals; Assessment of assessable value based on dealer's price; Plea of time bar for the demand.

Waiver of Pre-Deposit of Duty and Penalty:
The judgment dealt with the applications for waiver of pre-deposit of duty and penalty amounting to Rs. 58,63,318/- confirmed against the appellant for the clearance of pharmaceutical goods (sutures) to Government Hospitals through dealers between March 2001 and December 2004. The contention was that the duty should be paid based on the price at which goods were sold by dealers to hospitals, whereas the company had paid duty on the lower price at which it sold goods to the dealers. The Tribunal observed that the language of the contract indicated that the manufacturer was the one quoting rates, accepting tenders, and directly supplying goods to hospitals. The dealers were considered as agents entitled to remuneration, and their remuneration could not be classified as a trade discount. Therefore, the assessable value of goods for duty liability should be based on the price agreed between the manufacturer and the Government hospital. The Tribunal found no strong prima facie case for a total waiver of the demand based on these merits.

Plea of Time Bar:
Regarding the plea of time bar due to the show cause notice covering the period from March 2001 to December 2004, the Tribunal analyzed a letter dated 24-5-2000. The letter mentioned dispatching goods through dealers at the contracted price for supply to bulk consumers, who would then supply the products to the Government hospital and agency at the agreed price. The Tribunal noted that there was no indication in the letter that the goods would be sold to dealers for supply to Government agencies at a price lower than the contracted price. Thus, the Tribunal held that the submission claiming the demand was time-barred was not substantiated prima facie.

Decision and Directions:
After considering the facts and circumstances, the Tribunal directed a pre-deposit of Rs. 15 Lakhs towards duty within 8 weeks, following which the pre-deposit of the balance duty and penalty would be dispensed with, and the recovery stayed pending the appeals. The Tribunal emphasized that failure to comply with this direction would lead to the vacation of stay and dismissal of appeals without prior notice. Compliance was required to be reported by a specified date.

In conclusion, the judgment addressed the issues of waiver of pre-deposit of duty and penalty, assessment of assessable value, and the plea of time bar in a detailed manner, providing a comprehensive analysis of the legal aspects involved in the case.