1999 (9) TMI 517 - AT - Central Excise

Summary

Issues:
- Duty computation based on price lists filed by applicants
- Allegations of suppression and duty computation under Rule 6(b)(ii) of Valuation Rules, 1975
- Discrepancy in prices declared to Drug Control Authorities and Excise officers
- Demand of Rs. 1,07,20,005/- confirmed by Commissioner
- Imposition of penalty under Section 11AC and interest on late payment
- Claim of applicants regarding scheduled bulk drug "ETOFYLLINE" and Modvat credit
- Waiver of pre-deposit of duty and penalties
- Listing of appeal for out of turn hearing in December, 2000

Detailed Analysis:

The judgment by the Appellate Tribunal CEGAT, Mumbai pertains to three appeals arising from the same order. The first applicant, a pharmaceutical manufacturer, along with two other applicants who are employees, had six bulk drugs consumed in their own factories after duty payment based on filed price lists. Subsequently, investigations revealed discrepancies in declared prices to Drug Control Authorities and Excise officers. The authorities contended that duty computation should follow Rule 6(b)(ii) of Valuation Rules, 1975, not considering the transfers as sales. A show cause notice was issued, extending the period to five years, alleging suppression. The Commissioner confirmed a demand of Rs. 1,07,20,005/-, imposed penalties under Section 11AC, demanded interest on late payment, and penalized the employees.

A significant argument raised was that a substantial portion of the demand related to a scheduled bulk drug "ETOFYLLINE," suggesting the price fixed by drug control authorities should apply for duty calculation under Section 4. Additionally, the claim was made that payments by the assessee factory would be available as Modvat credit to recipient factories, ensuring no revenue loss. Further, it was argued that all admitted differential duties were paid before the issuance of show cause notices. Regarding penalties, it was contended that certain provisions should not apply due to the nature of the main bulk drug and the operational period of Section 11AC.

The Tribunal acknowledged the prima facie merits of the applicants' claims, leading to a waiver of pre-deposit for the remaining duty and penalties imposed on each applicant. Considering the substantial revenue involved, the appeal was scheduled for an out of turn hearing in December 2000, with notice issued for the same.