2016 (12) TMI 1639 - AT - Central Excise

Valuation - P & P Medicaments - It was alleged that the appellants had undervalued their physician s samples by determining its assessable value at transaction price u/s 4 instead of Section 4A of the CEA, 1944 - Board s Circular No.643/34/2002-CX dated 01.07.2002 - Held that - there are no material facts that the appellants deliberately or knowingly failed to discharge the duty liability - Hon ble Supreme Court in the case of Union of India Vs. Rajasthan Spinning & Weaving Mills 2009 (5) TMI 15 - SUPREME COURT OF INDIA has observed that the penalty u/s 11AC can be imposed for assessee s act of deliberate deception with intent to evade duty by adopting any of the means in that Section. The appellant has made out a case for waiver of penalty imposed under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the CEA, 1944 - Penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Undervaluation of physician's samples for Central Excise duty calculation under Section 4 instead of Section 4A.

Analysis:
The case involved M/s.Gena Pharmaceuticals Ltd., accused of undervaluing physician's samples for Central Excise duty calculation. The issue revolved around whether the appellants correctly determined the assessable value of physician's samples under Section 4A of the Central Excise Act, 1944, or if they should have used Section 4. The commodities in question fell under Chapter Heading/Sub-heading No.3003.10 and 3003.20 of the Central Excise Tariff Act, 1985, which were subjected to MRP valuation under Section 4A from 08.01.2005. The appellants cleared the samples based on an earlier Board's Circular instead of the subsequent one, leading to a dispute.

Upon hearing the arguments and reviewing the records, the Judicial Member noted that there was no evidence to suggest that the appellants intentionally evaded duty. Reference was made to a Supreme Court case highlighting that penalties can be imposed for deliberate deception to evade duty. However, as the appellants had already paid the Central Excise duty and interest, the Judicial Member concluded that there was no deliberate intent to evade duty. Consequently, the penalty under Rule 25 of the Central Excise Rules, 2002, along with Section 11AC of the Central Excise Act, 1944, was waived, and the appeal was allowed in favor of the appellants.

In summary, the judgment focused on the correct valuation of physician's samples for Central Excise duty calculation and whether there was deliberate intent to evade duty. The decision to waive the penalty was based on the lack of evidence showing intentional misconduct by the appellants, as they had already fulfilled their duty liability.