2015 (10) TMI 1351 - AT - Central Excise

Valuation of goods - Imposition of penalty - Held that - Appellant is liable to pay duty on the physician samples under Rule 4 of the Valuation Rules. This fact was not disputed by the Learned Advocate on behalf of the appellant. Duty is payable under Rule 4 of the Valuation Rules as held by the High Court and that Larger Bench of the Tribunal. Thus the Revenue has every right to demand the duty for the normal period of limitation under Section 11 A of the Central Excise Act. Hence the decision of the Tribunal in the case of Indchemie Health Specialities (2008 (11) TMI 514 - CESTAT AHMEDABAD) would not be applicable herein. So the demand of duty alongwith interest is justified. - demand of duty alongwith interest is upheld. The penalty is set-aside - Decided in favour of assessee.

Summary

Issues: Dispute on valuation of physician samples for duty payment, applicability of Board Circulars, demand of duty under Rule 4 of Valuation Rules, imposition of penalty under Rule 25 (1) of Central Excise Rules.

Analysis:
1. The case involved a dispute regarding the valuation of physician samples by the appellants for duty payment. The Show Cause Notice proposed a demand of duty along with interest and penalty, asserting that duty should be paid as per Rule 4 of the Valuation Rules. The Adjudicating Authority and Commissioner (Appeals) upheld the demand, leading to the appeal.

2. The appellant contended that they paid duty in accordance with Board Circular No. 643/34/2002-CX, but the demand was based on a subsequent Circular No. 813/10/2005-CX. The Revenue argued that the demand was within the normal limitation period, citing precedents like the Hon'ble Bombay High Court's decision and a Larger Bench of the Tribunal's ruling in similar cases.

3. The Tribunal found that as per the decisions of the Hon'ble Bombay High Court and the Larger Bench of the Tribunal, the appellant was indeed liable to pay duty under Rule 4 of the Valuation Rules for physician samples. The appellant's argument based on the earlier Circular was dismissed, emphasizing the Revenue's right to demand duty within the normal limitation period under Section 11 A of the Central Excise Act.

4. While upholding the demand of duty along with interest, the Tribunal agreed with the appellant that there was no suppression of facts, leading to the conclusion that the penalty imposed under Rule 25 (1) of the Valuation Rules could not be sustained. The Tribunal noted that the appellant had paid duty following the earlier Circular, indicating no intent to evade payment, thus justifying the setting aside of the penalty.

5. In the final decision, the impugned order was modified to uphold the demand of duty along with interest, while setting aside the penalty. The Tribunal disposed of the appeal in favor of the appellant based on the above analysis and conclusions.