2016 (12) TMI 647 - AT - Central Excise

Clandestine removal - pharmaceutical products - Held that - Reliance was placed on various private records and statements recorded during investigation by the officers. This was found to be not corroborated sufficiently by the Original Authority. We note that substantial amount of ₹ 28,97,641/- is demanded against unaccounted clearance of one product, namely, I.V. fluid. It is noted here that availability of exemption to this product has been a subject matter of dispute for long and the matter has reached up to Hon ble Supreme Court and was remanded to the Tribunal. The Tribunal, held against the respondent claim for exemption. During the pendency of these proceedings periodically notices were issued to the respondent as a protective measure. It is seen that such notices were challenged by way of writ-petition No. 14034/2010 before the Hon ble Madhya Pradesh High Court who quashed the notices in their order dated 06/12/10 as during the period the petitioner had a favourable order on merit regarding the exemption of the goods. Against this order, the Revenue moved Hon ble Supreme Court in civil writ-petition No.14181/2015 which is still pending and no details of stay or interim order has been brought to our notice. Considering that substantial portion of demand regarding I.V. fluid as contested by the Original Authority is purportedly involving demands which are already covered by way of periodical notices which was quashed by the Hon ble Madhya Pradesh High Court, the matter requires factual re-verification. During the arguments, both the sides were not able to categorically submit, based on documents, about the amount of ₹ 28,97,641/- being partly or wholly covered in such periodical notices. Though contrary claims were made, no supporting evidence are placed before us. As such, we find that this requires verification by the Original Authority for a fresh decision - appeal allowed by way of remand.

Summary

Issues:
Appeal against order of Commissioner of Central Excise, unaccounted clearance of pharmaceutical products, demand for duty on I.V. fluids, legality of impugned order, demand for extended period, availability of exemption, re-verification of demands.

Analysis:
The appeal before the Appellate Tribunal CESTAT New Delhi was filed by the Revenue against the order dated 21/11/05 of the Commissioner of Central Excise, Indore, involving 5 appeals against the common impugned order. The main respondent in the case was M/s Inven Pharmaceuticals Pvt. Ltd. The case revolved around investigations conducted by Central Excise Intelligence officers, alleging unaccounted clearance of pharmaceutical products. The Commissioner's order dropped the demand made in the show cause notice, leading to the Revenue filing the appeals (para. 1).

The Revenue contended that the main respondent was involved in unaccounted manufacture and clearance of pharmaceutical products, supported by private records and statements. The Revenue disputed the Commissioner's decision to drop the duty on I.V. fluids, arguing that the demand was not time-barred as it dealt with clandestine unaccounted clearances (para. 2).

On the other hand, the respondents' counsel argued that the Department failed to provide proper corroborative evidence for unaccounted clearances, making the impugned order legally unsustainable. Regarding the duty demand on I.V. fluids, the respondents claimed they regularly provided details to the Department, leading to periodic show cause notices being issued, and supported the impugned order's decision (para. 3).

After hearing both sides and reviewing the records, the Tribunal noted that a significant amount was demanded for unaccounted clearance of I.V. fluid, a product subject to exemption disputes. The Tribunal highlighted that the matter had reached the Supreme Court and was remanded to the Tribunal. Due to conflicting claims and lack of evidence on whether the demands were covered by previous notices, the Tribunal set aside the order and remanded the matter for factual re-verification by the Original Authority (para. 4-5).

In conclusion, the appeals by the Revenue were allowed by way of remand, with the Tribunal emphasizing the need for re-verification of demands and granting the respondent an opportunity to make submissions before a fresh decision by the Original Authority.