1983 (6) TMI 101 - AT - Central Excise

Summary

Issues:
1. Classification of SPASMINDON PAEDIATRIC DROPS under the Central Excise Tariff.
2. Allegations of suppression of facts and willful mis-statement by the manufacturer.
3. Justification for demanding duty and penalty.
4. Appeal against the order of the Collector of Central Excise (Appeals).
5. Cross-objection filed by M/s. Indopharma Pharmaceuticals Works Ltd.

Detailed Analysis:
1. The appeal concerns the classification of SPASMINDON PAEDIATRIC DROPS under the Central Excise Tariff. The Additional Collector of Central Excise, Bombay-II, contended that the medicine falls under Item 14 of the Tariff, and duty was not paid by the manufacturer, leading to a demand for duty for a specific period. The Collector of Central Excise (Appeals) differentiated between the time periods and upheld the duty demand for a certain period, along with confirming the penalty. The main issue is whether there was willful mis-statement by the manufacturer during the specified period.

2. The appellant argued that the manufacturer willfully misstated the classification of the medicine to avoid paying duty to the Central Excise department. They claimed that the manufacturer's behavior, including an undertaking to the State Excise Authorities for refunds if Central Excise duty was levied, indicated fraudulent conduct. The appellant asserted that the manufacturer deliberately paid duty to the State Excise Authorities to circumvent Central Excise duty. The central question was whether there was intentional misrepresentation by the manufacturer during the period in question.

3. The respondents countered the allegations of willful mis-statement, highlighting that the manufacturer was under the control of State Excise Authorities until informed about the correct classification under the Central Excise Tariff. The respondents argued that there was no suppression of facts, as the Central Excise Officers approved the classification lists, and the manufacturer operated in good faith based on prior approvals. They contended that no willful suppression occurred, and the demand for duty should not be revived. Additionally, they challenged the penalty imposed, citing lack of mens rea on the manufacturer's part and requested its removal.

4. The Tribunal analyzed both parties' submissions and concluded that there was no willful mis-statement by the manufacturer. It was determined that the confusion regarding the correct classification arose due to a lack of understanding by both the manufacturer and the authorities until clarified by the State Excise Authorities. The Tribunal found no basis for alleging willful suppression of facts and dismissed the appeal by the Additional Collector of Central Excise, Bombay-II. Regarding the cross-objection, the Tribunal agreed that there was no mens rea on the part of the manufacturer, leading to the setting aside of the penalty imposed by the Assistant Collector.

In conclusion, the Tribunal dismissed the appeal filed by the Additional Collector of Central Excise, Bombay-II, and allowed the cross-objection of M/s. Indopharma Pharmaceuticals Works Ltd. by setting aside the penalty imposed, emphasizing the absence of willful mis-statement and mens rea in the case.