2010 (7) TMI 366 - AT - Central Excise

Demand 100% EOU clearance of goods along with packing material to another on loan licence basis Payment of duty on loan licence basis - adoption of assessable value was also in accordance with law - adjudicating authority has held that assessee adopted a novel method for evasion of duty by first sending the goods to another under the cover of central excise invoices, showing the less assessable value than what has been ultimately received by them as commercial consideration - stands contended before Tribunal that assessee had paid the duty at the time of clearance of the goods by adopting the assessable value as reflected in the commercial invoices raisesd - no justification in confirmation of demand of duty

Issues:
- Confirmation of demand of duty against M/s. Lacure Pharmaceutical Ltd.
- Imposition of penalty on Shri Sameer Udani and M/s. Vapi Care Pharma Pvt. Ltd.
- Disputed clearance of goods to M/s. Vapi Care Pharma Pvt. Ltd.
- Interpretation of assessable value and duty payment.
- Application of Foreign Trade Policy and handbook of procedure.
- Justification of differential duty by the Commissioner.
- Bar on demand by limitation period.
- Non-disclosure of commercial invoices' value.

Confirmation of Demand of Duty:
The judgment addressed the confirmation of demand of duty against M/s. Lacure Pharmaceutical Ltd. The appeals arose from an order confirming a duty demand of Rs. 86,84,707 against the company. The Commissioner also imposed penalties on Shri Sameer Udani and M/s. Vapi Care Pharma Pvt. Ltd. The issue revolved around the clearance of medicaments by Lacure to Vapi Care Pharma, ultimately reaching Cadila Pharmaceuticals. The Revenue alleged that Lacure should have paid duty based on the commercial invoice value, leading to the initiation of proceedings and the impugned order.

Interpretation of Assessable Value and Duty Payment:
The judgment analyzed the interpretation of assessable value and duty payment in the context of the case. Lacure cleared goods to Vapi Care Pharma under a loan license arrangement, paying duty based on the cost structure. The Revenue contended that Lacure should have paid duty based on the value charged to Cadila Pharmaceuticals. The advocates for Lacure argued that the assessable value adopted was correct, as per the permission of the Development Commissioner and in compliance with the law.

Application of Foreign Trade Policy and Handbook of Procedure:
The judgment discussed the application of the Foreign Trade Policy and the handbook of procedure. The advocates highlighted that Lacure's clearance to Vapi Care Pharma was in line with the provisions of law and the permission granted by the Development Commissioner. They emphasized that the assessable value was determined correctly based on input and conversion costs, challenging the Revenue's stance on duty payment based on commercial invoices.

Bar on Demand by Limitation Period:
The judgment considered the bar on demand by the limitation period. It was noted that the demand was raised beyond the normal period, with clearances made under the Development Commissioner's permission and central excise invoices filed. The non-disclosure of higher commercial invoice values to Cadila Pharmaceuticals was deemed not to warrant the invocation of the longer period, as the operation was conducted transparently within regulatory knowledge.

Conclusion:
In conclusion, the Tribunal found no dispute regarding Lacure's clearance process to Vapi Care Pharma and the duty payments made. The judgment emphasized that the demand of duty against Lacure and the penalties imposed were unsustainable. Consequently, the impugned order was set aside, and the appeals were allowed in favor of the appellants, providing consequential relief.

Judgment Pronouncement:
The judgment was pronounced on 7-7-2010 by the Appellate Tribunal CESTAT, Ahmedabad, with Ms. Archana Wadhwa and Shri B.S.V. Murthy as the presiding members. The legal representatives included advocates for the appellant and the Respondent's representative. The detailed analysis covered various legal aspects, including duty demand, assessable value interpretation, application of trade policies, limitation period, and non-disclosure considerations, resulting in a favorable outcome for the appellants.

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