2011 (2) TMI 992 - AT - Central Excise

Valuation of physician samples of medicaments, distributed free of cost by the appellants - the appellants have paid the duty on cost construction method for arriving at the assessable value of the same, the Revenue s contention is that the said samples are required to be assessed to duty on prorata basis of the value of regular packs - invoking extended period - Held that - The demand raised beyond the limitation period is barred. However, inasmuch as the issue stands decided against the appellants, the demand within the limitation is required to be confirmed. We order accordingly and direct the lower authorities to quantify the same. As regards penalty it is to be set-aside laying down that it is a bonafide dispute of interpretation. Inasmuch as the demand is barred by limitation, penalty under Section 11AC is not warranted. Thus set-aside the penalty imposed on the appellants.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Pre-deposit of balance amount of duty and penalty.
3. Decision on appeal issue regarding valuation of physician samples.
4. Limitation period for the show cause notice.
5. Interpretation of Board circular on limitation period.
6. Confirmation of demand within the limitation period.
7. Imposition of penalty under Section 11AC.

Analysis:

1. Condonation of Delay: The prayer in the COD application sought to condone a delay of three months and five days in filing the appeal due to coordination issues. The Revenue had no objection to condonation, which was allowed, leading to the consideration of the stay petition.

2. Pre-deposit of Duty and Penalty: Out of the total duty demand, an amount was already deposited by the appellant. The Tribunal dispensed with the pre-deposit condition for the balance amount of duty and penalty, considering the amount already paid as sufficient under Section 35F.

3. Valuation of Physician Samples: The issue involved the valuation of physician samples of medicaments distributed free of cost. The appellants paid duty based on the cost construction method, while the Revenue argued for assessment on a prorata basis of the value of regular packs. Previous judgments by the Tribunal and the Supreme Court favored the Revenue's stance, leading to a decision against the appellants on the merits of the issue.

4. Limitation Period: The show cause notice was issued beyond the normal limitation period. The appellant argued that due to conflicting Tribunal decisions and the matter being referred to a Larger Bench, no willful misstatement or suppression existed. Citing precedents, the appellant contended that demands beyond the normal period had been struck down in similar cases.

5. Interpretation of Board Circular: The Tribunal's decision in a related case highlighted the importance of considering contradictory views and the non-binding nature of circulars on assessee and Tribunal. It emphasized that different interpretations were possible, leading to the conclusion that the extended period could not be invoked, and penalty should not be levied.

6. Confirmation of Demand: The Tribunal held that the demand beyond the limitation period was barred, but the demand within the limitation needed to be confirmed. The lower authorities were directed to quantify the demand within the limitation period.

7. Imposition of Penalty: Given the bonafide dispute on valuation, no malafide was attributed to the appellants, leading to the setting aside of the penalty imposed under Section 11AC. The Tribunal agreed that no penalty should be imposed due to the genuine nature of the dispute.

In conclusion, the Tribunal disposed of the COD application, stay petition, and appeal based on the above considerations, emphasizing the legal aspects of condonation, pre-deposit, valuation issues, limitation periods, and penalties under the Central Excise Act, 1944.