1998 (3) TMI 230 - AT - Central Excise

Summary

Issues:
1. Eligibility for concessional rate of duty under Notification 29/88 for a product based on bulk drug Carbimazole.
2. Allegation of suppression of facts by the Appellants to evade Central Excise duty.
3. Validity of show cause notice issued beyond the limitation period under Section 11A of the Central Excise Act, 1944.

Eligibility for Concessional Rate of Duty:
The case involved the Appellants, engaged in manufacturing Patent and Proprietary medicaments, specifically a product called Neo-Mercazole based on bulk drug Carbimazole. The Appellants claimed exemption under Notification 29/88, which provides a concessional rate of duty for single ingredient medicines based on specific bulk drugs. However, the department alleged that Carbimazole had been deleted from the Second Schedule of the Drug Price Control Order (DPCO), making Neo-Mercazole ineligible for the concessional rate. The Commissioner of Central Excise, Mumbai-III, after considering the defense, confirmed the duty demand and imposed a penalty, stating that the Appellants had suppressed the deletion of Carbimazole from the DPCO to evade proper duty.

Allegation of Suppression of Facts:
The Appellants argued that the show cause notice issued in 1993 was beyond the limitation period under Section 11A of the Central Excise Act, as it covered a period from February 1990 to November 1990. They contended that they had filed a classification list in 1990, duly approved by the Assistant Commissioner, under Notification 29/88. The Appellants cited a previous show cause notice from 1991, which did not allege suppression of facts, to argue against the department's claim of intentional suppression. The department, represented by the ld. DR, highlighted that the Appellants omitted crucial information in their classification list, hindering proper enquiry by the Assistant Commissioner. The Commissioner found discrepancies in the Appellants' submissions, supporting the allegation of suppression of facts.

Validity of Show Cause Notice:
The Tribunal, comprising S/Shri K.S. Venkataramani and G.N. Srinivasan, analyzed the submissions and held in favor of the Appellants. They agreed that the show cause notice issued in 1993, alleging similar grounds as the previous notice, was beyond the limitation period. Citing the Neyveli Lignite Corporation case, the Tribunal supported the Appellants' argument against the extended period for demand when a subsequent notice is issued for an earlier period. The Tribunal also emphasized the necessity for the Assistant Commissioner to conduct proper enquiries before approving classification lists. Considering the Appellants' previous compliance with duty demands, the Tribunal concluded that the Appellants had made a valid case on grounds of limitation, ultimately allowing the appeal.

---