2017 (3) TMI 1448 - AT - Central Excise

Benefit of N/N. 245/83 dated 13-09-1983 - eligibility for discount - P&P medicines - denial of benefit of notification on the ground that the appellant while claiming the discount of the price list have withheld vital information in as much as they have not submitted the documents showing the medicines has been specified in the DPCO 1987 and not declared at the footnote of the price list that the medicines figured in DPCO - Held that - the departmental authority have been approving the price list from time to time, despite knowing that, the appellant have shown DPCO prices in the price list and claimed the discount of 15% in terms of Notification No. 245/83. If at all the authority has any doubt regarding the DPCO price, nothing prevented the department to call for necessary documents before approval of the price list. In the notification, there is no condition that price list with reference DPCO 1987 is required to be submitted - there is no suppression of the fact on the part of the appellant in as much as they have correctly declared all the details required in their price lists - Though the department is empowered to re-open the approval of price list, however the same can be done within one year or as the case may be five years depending on the facts whether there is any suppression of fact on the part of the appellant. There is no suppression of fact, therefore it was only normal period of one year available to the department to re-open the approval of price list which the department failed to do so and therefore entire demand raised for the extended period is time barred. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Eligibility for 15% discount on Maximum Retail Price (MRP) under Notification No. 245/83.
2. Compliance with the conditions of the Notification No. 245/83.
3. Invocation of the extended period of limitation under Section 11A of the Central Excise Act, 1944.
4. Alleged suppression of facts by the appellant.
5. Validity of the demand for differential duty and penalties.

Detailed Analysis:

1. Eligibility for 15% Discount on MRP:
The appellant, engaged in the manufacture of pharmaceutical products, claimed a 15% discount on MRP under Notification No. 245/83. They filed price lists from 1991, declaring that the MRP was fixed under the Drug (Price Control) Order (DPCO), 1987. The department initially approved these price lists without objection.

2. Compliance with Notification No. 245/83:
The show cause notice alleged that the appellant did not submit documents proving that the medicines were specified under the DPCO 1987, nor did they declare this at the footnote of the price list. The adjudicating authority denied the discount and confirmed a duty demand of ?49,81,952, imposing an equal penalty without citing statutory provisions. The appellant contended that they had declared the MRP as per DPCO 1987 in the price lists, which were approved by the department, and no objections were raised at the time of approval.

3. Invocation of Extended Period of Limitation:
The appellant argued that the demand was time-barred as the show cause notice was issued after the normal limitation period. They claimed there was no suppression of facts, and the department had approved the price lists knowing the MRP was as per DPCO 1987. The department, however, contended that the appellant failed to show that the MRP declared was specified in the DPCO 1987, thus violating the notification’s condition.

4. Alleged Suppression of Facts:
The department argued that the appellant’s failure to submit the DPCO 1987 price list amounted to suppression of facts. The appellant maintained that they had correctly declared all details in the price lists and that the department could have requested necessary documents before approving the price lists.

5. Validity of Demand and Penalties:
The Tribunal found no suppression of facts by the appellant. It noted that the department had been approving the price lists despite knowing the declared prices were as per DPCO 1987. The Tribunal held that the demand for the extended period was time-barred, as there was no willful misstatement or suppression of facts. The reliance on the Supreme Court judgment in Easland Combines was misplaced, as it supported the appellant’s case by stating that re-opening of the approval could only occur within one year if there was no suppression.

Separate Judgment by Member (Technical):
The Member (Technical) disagreed, arguing that the appellant failed to produce evidence of DPCO 1987 approval, amounting to mis-declaration and fraud. He held that the extended period of limitation was rightly invoked and dismissed the appeal.

Third Member Decision:
The third Member (Technical) concurred with the Member (Judicial), finding no mis-declaration or suppression of facts by the appellant. He noted that the approval of price lists was a statutory process, and any rectification should have been initiated within the prescribed period. The demand was thus found to be time-barred.

Majority Order:
The majority set aside the impugned order and allowed the appeal with consequential relief, concluding that the demand was not sustainable due to being time-barred.

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