2013 (6) TMI 581 - AT - Central Excise

Valuation of medicaments - MRP bases valuation - clandestine removal - demand based of statement of chemists - as per revenue the excess collection of cash than the assessable value on which the appellant has discharged duty, stands clearly admitted by the Director of the company - Held that - appellants have not been able to make out a good prima facie case in their favour so as to dispense with the condition of pre-deposit of the entire amount. - Directed to deposit 50%.

Summary

Issues Involved:
Prayer to dispense with pre-deposit of duty and penalty confirmed against a pharmaceutical company engaged in manufacturing of Medicaments based on under-valuation and clandestine removal.

Analysis:
1. Under-valuation of Medicines:
- The duty demand against the pharmaceutical company was confirmed primarily due to under-valuation of medicines and findings of clandestine removal.
- The appellant argued that they were clearing goods based on assessable value under Section 4 of the Excise Act, unaware that medicaments were chargeable based on MRP under Section 4A from January 2005.
- The appellant acknowledged the duty liability based on MRP but contested the duty calculation using MRP of 2006-07 instead of the lower MRP of 2005-06, reducing the demand.

2. Clandestine Removal Allegations:
- The remaining demand was based on allegations of clandestine removal supported by statements of chemists and discrepancies in sales records of a dealer.
- The appellant argued that chemists' statements were insufficient evidence as they were not involved in manufacturing and lacked cross-examination.
- The appellant also contended that discrepancies in dealer invoices could be explained by transactions spanning multiple periods, with some invoices neutralizing excess invoices.

3. Decision and Order:
- The Revenue argued that the excess cash collected by the company and evidence of clandestine activities were established.
- Despite financial difficulties and factory closure, the Tribunal directed the appellant to deposit 50% of the duty amount within 8 weeks to hear the appeal.
- The remaining duty and penalties were waived, and recovery stayed during the appeal's pendency, emphasizing the need to protect Revenue's interest.

4. Conclusion:
- The Tribunal found insufficient prima facie evidence to dispense with the pre-deposit condition, requiring the appellant to deposit a partial amount.
- The decision balanced the appellant's financial challenges with the Revenue's interest, ensuring a fair hearing while safeguarding the duty and penalty recovery process.