2009 (6) TMI 751 - AT - Central Excise

Summary

Issues: Valuation of goods based on agreement with Government hospitals, Bar of limitation regarding extended period for show cause notices, Comparison of facts between first and subsequent show cause notices, Exercise of discretion under Section 35F of the Central Excise Act for stay of impugned order.

Valuation of Goods Issue:
The applicants argued that despite selling goods at a lower price, the valuation was based on the agreement with Government hospitals, which they deemed impermissible. The Tribunal noted the agreement between the applicants and the Government for supplying pharmaceutical products, where rates were fixed. Although the applicants supplied products to agents at lower prices, the supply to Government hospitals was at the agreed rates. The Tribunal found no merit in the applicants' claim that goods should be valued based on agent prices, as the supply was on behalf of the applicants to the hospitals at agreed rates. Reference to a previous case was deemed unhelpful in justifying a stay of the order.

Bar of Limitation Issue:
Regarding the limitation, the applicants referred to a Supreme Court decision stating that if all relevant facts were known to authorities during the first show cause notice, subsequent notices based on the same facts should not attract an extended limitation period. However, the applicants failed to provide the first show cause notice for comparison. The Tribunal emphasized that the facts of the earlier and later notices must align to reject the suppression of facts claim. It was deemed premature to decide if the facts were known to the department during the first notice.

Comparison of Facts Issue:
The Tribunal highlighted the importance of comparing the facts in the first and subsequent show cause notices to determine if the extended limitation period applied. The original authority noted differences in the subject matter and circumstances of both notices, indicating distinct grounds and claims. The issue of whether the department was aware of the facts during the first notice required a detailed examination during the appeal process.

Exercise of Discretion Issue:
No other grounds were found to exercise discretion under Section 35F of the Central Excise Act for granting a stay of the impugned order. Financial hardship was not established for waiving the pre-deposit requirement, and considering the revenue's interest, the applications were dismissed. The applicants were directed to deposit the demanded amount within eight weeks, with a compliance report due on a specified date.