1998 (4) TMI 218 - AT - Central Excise

Summary

Issues:
Whether the value of clearances of clinical samples of Patent or Proprietary (P or P) medicines exempt under Notification No. 48/77-C.E. should be considered in determining eligibility for small scale exemption under Notification No. 1/93-C.E.

Analysis:
The appeal involved a consideration of whether the value of clearances of clinical samples of Patent or Proprietary (P or P) medicines, enjoying exemption under Notification No. 48/77-C.E., should be included in calculating the aggregate value of clearances for determining eligibility for the small scale exemption under Notification No. 1/93-C.E. The Assistant Collector of Central Excise, Calcutta, and the Collector of Central Excise (Appeals), Calcutta, had opined that the clearances of clinical samples should be accounted for in determining the aggregate value of clearances. The issue centered around the interpretation of the conditions specified in the notifications.

The Notification No. 1/93-C.E. exempted specified excisable goods from Central Excise duty subject to conditions, including that the aggregate value of clearances for home consumption should not exceed Rs. 2 crores in the preceding financial year. The exemption did not apply to goods chargeable to nil rate of duty or fully exempted unless based on the value or quantity of clearances in a financial year. The dispute arose because the exemption under Notification No. 48/77-C.E. was believed to be quantity-based, falling under the exclusion of Explanation II of Notification No. 1/93-C.E.

The exemption under Notification No. 48/77-C.E. pertained to clinical samples of P or P medicines, limited to a quantity not exceeding 4% by value of the total duty paid clearances in the preceding month. This exemption was not tied to the quantity of clearances in a financial year. The Tribunal concluded that as the exemption for clinical samples was monthly and not annual, it did not align with the conditions triggering exclusion under Notification No. 1/93-C.E. The Tribunal disagreed with the Commissioner of Central Excise (Appeals) and set aside the decision regarding the inclusion of exempted clinical samples in the aggregate value of clearances for the small scale exemption.

In light of the analysis and the discrepancy in interpreting the notifications, the Tribunal allowed the appeal and overturned the decision regarding the addition of exempted clinical samples in calculating the aggregate value of clearances for the small scale exemption. The rest of the points raised in the impugned order were not addressed in the appeal, leading to the order being set aside solely on the issue of the clinical samples' inclusion in determining eligibility for the small scale exemption.