2012 (11) TMI 995 - AT - Central Excise

Waiver of pre-deposit - penalty under Rule 25 of Central Excise Rules - whether the appellant is required to be visited with penalty under Rule 25 of the Central Excise Rules, 2002 for not discharging the duty liability on the P & P Medicaments, cleared by them by applying pro-rata value of sale pack cleared by them Held that - Appellant had cleared physician samples by following the principles of cost control method as provided in Rule 8 of the Central Excise (Valuation) Rules. The law that the physicians samples needs to be valued proportionately with the sale pack - If two views were possible for the valuation of physician samples, appellant s choosing a particular view, cannot be faulted with demand of duty liability and interest thereof, is rejected - penalty under the provisions of Rule 25 of Central Excise Rules, be set-aside

Summary

Issues:
Waiver of pre-deposit of differential duty, interest, and penalty under Rule 25 of Central Excise Rules, 2002.

Analysis:
The appellant filed an application seeking the waiver of an amount confirmed as differential duty, interest, and penalty under Rule 25 of the Central Excise Rules, 2002. The Tribunal noted that the appellant had already paid the entire duty and interest amount and was only seeking waiver of the penalty. The primary issue was whether the penalty under Rule 25 was justified for not discharging the duty liability on the P & P Medicaments cleared by the appellant using a specific valuation method for physician samples. The Tribunal observed that until a specific decision by the Larger Bench in the Cadila Pharmaceuticals case, there were differing views on the valuation of physician samples. As the appellant had followed a permissible view at that time, the penalty was deemed unwarranted.

The Tribunal, after hearing both sides on the merits of the case, focused on determining if the penalty under Rule 25 of the Central Excise Rules was justified for the appellant's valuation method of physician samples. It was established that until the decision in the Cadila Pharmaceuticals case, there were conflicting views on how physician samples should be valued. The Tribunal acknowledged that the appellant had followed an acceptable method at that time, and therefore, the penalty imposed by the lower authority was set aside. The appeal was allowed partly, with the duty liability and interest being upheld, while the penalty under Rule 25 was annulled.

In conclusion, the Tribunal granted partial relief to the appellant by rejecting the appeal concerning duty liability and interest but setting aside the penalty imposed under Rule 25 of the Central Excise Rules. The decision was based on the understanding that the appellant's choice of valuation method for physician samples was justifiable given the legal ambiguity that existed before the specific ruling by the Larger Bench in the Cadila Pharmaceuticals case.