2016 (7) TMI 552 - AT - Central Excise

Valuation of physician samples manufactured along with other regular medicament - Held that - The issue stand decided against assessee by the Hon ble Supreme Court decision in Medley Pharmaceuticals Ltd. 2011 (1) TMI 13 - SUPREME COURT OF INDIA , as such, fairly agrees that duty confirmation by the lower authorities is as per the declaration of law In view of the fact that issue on merits stands against the assessee, we uphold the demand confirmed against them but falling within the limitation period. As admittedly, there was confusion in the field and there were various circulars issued by the Board supporting the assesses stand, the demand falling within the limitation period would be recalculated by the original adjudicating authority. As regards the penalty, we find that in similar set of facts and circumstances, Tribunal in the case of M/s. Lupin Ltd. 2016 (2) TMI 682 - CESTAT NEW DELHI have already held that there is no case for penalty. We have also held that extended period of limitation is not available to the Revenue inasmuch as there was no malafide in which case also, no penalty can be imposed

Summary

Issues:
Valuation of physician samples, duty payment basis, demand raised in Show Cause Notice, period of limitation, confusion in the field, imposition of penalty.

Valuation of Physician Samples:
The dispute in the appeal revolved around the valuation of physician samples manufactured by the appellant along with regular medicament. The appellant had paid duty on the physician samples on a cost basis as per Rule 8 of the Central Excise Valuation Rules, 2000. However, the Revenue contended that the duty should have been paid on a pro rata basis by adopting the amount paid on the regular pack of medicament. A Show Cause Notice was issued for the period from April 2005 to March 2006, resulting in a demand of approximately ?2.25 lakh along with a penalty imposed by the lower authority.

Period of Limitation and Imposition of Penalty:
The advocate for the appellant acknowledged that the issue had been decided against them by a Supreme Court decision but argued that a part of the demand fell outside the period of limitation. The advocate also highlighted the confusion in the field during the relevant period, citing various circulars of the Board and ongoing litigations. It was contended that there was no malafide intent on the part of the assessee to warrant the imposition of a penalty. The advocate sought the setting aside of the demand beyond the limitation period and the penalty based on precedents, including a Tribunal's decision in a similar case.

Judgment and Penalty Imposition:
The Tribunal upheld the demand confirmed against the appellant within the limitation period due to the confusion in the field and the circulars issued by the Board supporting the assessee's position. The recalculated demand within the limitation period was to be determined by the original adjudicating authority. Regarding the penalty, the Tribunal referred to a previous case involving similar circumstances where it was held that there was no case for penalty. As there was no malafide intent and the extended period of limitation was not applicable, the Tribunal set aside the penalty imposed on the appellant.

Conclusion:
The appeal was allowed partially, with the demand confirmed within the limitation period upheld and recalculated, while the penalty was set aside based on the absence of malafide intent and the precedent set in a similar case.