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2023 (11) TMI 675 - AT - Central ExciseDenial of exemption of Notification No. 01/2011-CE dated 01.03.2011 - manufacture of allopathic generic medicaments - Whether the allopathic medicaments are eligible for the exemption of central excise duty but for at the rate of 2% in terms of Notification No. 01/2011 dated 01.03.2011? - invocation of extended period of limitation. HELD THAT - In the notification column (3) of Entry No. 37 in use of word including in context of the content of column (3) of Entry No. 37 of the notification. But we are of the opinion that Tribunal ought not to have traversed beyond interpreting the provision as per the language employed in the statute itself. It is the settled proposition of law that while interpreting the taxing statutes the authorities cannot import which is not expressed in the provision itself - reliance placed upon the decision in the matter of COMMISSIONER OF SALES TAX, UP. VERSUS MODI SUGAR MILLS LTD. 1960 (10) TMI 65 - SUPREME COURT applying above discussed principles of interpretation and the meaning/purpose of word include . On reading column (3) of the impugned notification (Entry No. 37), it is observed that it talks about the medicaments manufactured exclusively in accordance with the formulae described in the authoritative books specified in the First Schedule to the Drugs and Cosmetic Act, 1940 or Homeopathic Pharmacopoeia of India or the United States of America or the United Kingdom or the German Homeopathic Pharmacopoeia, as the case may be, and sold under the name as specified in such books or pharmacopeia. The books mentioned in First Schedule are with respect to the Ayurvedic, Unani, Siddha Formulae. Hence, there is no ambiguity created by the legislature by using the word includes with the medicaments when medicaments prepared in accordance of books about Ayurvedic, Unani, Siddha are being discussed. From no stretch of imagination such medicaments can mean to include allopathic medicaments within their scope by the mere use of word include . More so, for the reason that there is no possibility of description of any formula for allopathic medicament in the books meant for medicaments manufactured under Ayurveda and Siddha systems - the arguments submitted by the appellant are not at all acceptable to set aside the order confirming the demand against them nor for doing away with the penalties. The said findings are therefore upheld. Invocation of Extended period of Limitation - HELD THAT - Section 11A does not provide for extended period of limitation because someone is in that line of business for any length of time. While the appellant was in this line of business, the department was in the business of issuing exemption notifications, applying them and scrutinising tax returns for a much longer period. In this case, even as per the SCN, the nature of the goods manufactured by the appellant was explicitly stated not only on the packets but also in the ER 8 Returns filed by the appellant. The irresistible conclusion is that the officer had not either scrutinised the returns or having scrutinised, did not issue the demand within time. Another reason for invoking extended period of limitation in the SCN was that the appellant was operating under self-assessment and in an era of self-assessment and self-removal, it was required to correctly self-assess duty and pay it and the appellant did not do so by claiming the benefit of an ineligible exemption notification. In the context of demand of service tax under section 73 of the Finance Act, 1994 which is similar to section 11A of the Central Excise Act. The facts that the appellant was operating under self-assessment and that it was in the business of manufacturing pharmaceuticals are both not relevant to invoking extended period of limitation. The appellant was under no obligation to seek any clarification from the department during self-assessment as has been held by the Delhi High Court in Mahanagar Telephone Nigam Ltd. There is no mis-statement as all the facts have been correctly indicated in the ER-8 Returns filed by the appellant and also on the aluminium foils and packing of the goods even as per the SCN. The appellant had also not violated Rules 4,6,8 and 12 of Central Excise Rules 2002 as the appellant had self-assessed and paid duty and filed returns as per its understanding. The demand for extended period of limitation cannot be sustained. Consequently, the penalty under section 11AC imposed on the appellant also needs to be set aside Appeal allowed partly.
Issues Involved:
1. Eligibility of allopathic medicaments for exemption under Notification No. 01/2011-CE dated 01.03.2011. 2. Invocation of the extended period of limitation for demand of duty. Summary: 1. Eligibility of Allopathic Medicaments for Exemption: The primary issue was whether allopathic medicaments are eligible for the exemption of central excise duty at the rate of 2% under Notification No. 01/2011-CE dated 01.03.2011. The appellant claimed the benefit under Entry No. 37 of the notification, which mentions "medicaments (including those used in Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systems)." The Tribunal observed that the term "including" in the notification is used to expand the meaning to cover medicaments from traditional systems but does not extend to allopathic medicaments. The Tribunal held that the language of the notification clearly reflects the intention of the legislature to include only those medicaments prepared in accordance with the formulae described in the authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, 1940. Therefore, allopathic medicaments do not fall under the scope of the said entry, and the benefit of the duty exemption was rightly denied to the appellant. 2. Invocation of Extended Period of Limitation: The second issue was whether the extended period of limitation could be invoked for the demand of duty. The appellant argued that there was no suppression of facts or mala fide intention, as all relevant information was disclosed to the department, including in the quarterly ER-8 Returns. The Tribunal noted that the appellant had self-assessed and paid duty based on its interpretation of the exemption notification and had filed returns accordingly. The Tribunal emphasized that the department had an obligation to scrutinize the returns and raise any objections within the normal period. The Tribunal found that the extended period of limitation could not be invoked merely because the appellant claimed an ineligible exemption during self-assessment. There was no evidence of fraud, collusion, or wilful misstatement by the appellant. Consequently, the demand for the extended period was set aside, and the penalty under section 11AC was also set aside. Conclusion: (i) Allopathic medicaments are not eligible for the exemption under Entry No. 37 of Notification No. 01/2011-CE dated 01.03.2011. The benefit of duty exemption was rightly denied to the appellant. (ii) The extended period of limitation is not invokable. The demand is confined to the normal period. The appeal was partly allowed, confirming the demand for the normal period and setting aside the demand for the extended period.
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