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TMI Blog2024 (12) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... oods) Rules, 2001. Therefore, entire basis of the department that such procedure was not followed is not relevant. Since, the duty demand itself is not prima facie sustainable on the company, there is no question of imposing personal penalty on the employee of M/s. Sterlling Biotech Ltd. who is the appellant herein. The issue involved is pure interpretation of the notification. The company M/s. Sterlling Biotech Ltd had been declaring the entire facts about the availment of the notification and declaring in their ER-1 return the product discretion, notification number, Sr. number of the entry. Therefore, there was no suppression of fact or mala fide either on the part of the company M/s. Sterlling Biotech Ltd or on the part of the present appellant. For this reason, also the penalty on the appellant is absolutely unsustainable. The appellant have relied upon the decision of S K Shah [ 2008 (7) TMI 433 - HIGH COURT OF GUJARAT AT AHMEDABAD] Hon ble Gujarat High Court wherein on the issue of interpretation of notification personal penalty under Rule 26 was held to be not impossible. The penalty imposed on the appellant under Rule 26 is not sustainable. Hence, same is set aside - Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty amounting to Rs. 2,60,35,140/- equal amount of penalty and interest on the company and penalty of equal of the duty Rs. 2,60,35,140/- was imposed on the Shri K Baser Vice President of M/s Sterlling Biotech Ltd under Rule 26 on the charge that Mr. K Baser was overall incharge of all the activity. Therefore, he is involved in aiding or abetting the duty evasion done by M/s. Sterlling Biotech Ltd. 1.3 Being aggrieved by the order-in-original, appellant Shri K Baser filed the present appeal. 2. Shri Nikhil Gupta, learned Counsel along with Shri Ikesh Nagpal learned Chartered Accountant appearing on behalf of the appellant submits that the contention of the Revenue is that description (A) of Sr. No. 108 of the notification mentioned drugs specified in the list 3 and 4 appended to the Notification No. 12/2012-CUS dated 17th March, 2012. He submits that drugs mentioned in description (A) also includes Bulk drug. Therefore, the goods in question are covered under description (A) of Sr. No. 108 of the Notification, hence, unconditionally exempted. He submits that there is no dispute that all the five products are specified in list 3 or list 4 of Notification No. 12/2012-CUS. In support, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal of M/s. Sterlling Biotech Ltd has been disposed of as abated under Rule 22 of the CESTAT (Procedure) Rules, 1982. Hence, the company has been liquidated as per the NCLT s order dated 11th November, 2022. But to decide the present appeal, it is necessary to examine the merit of the company s case as the penalty under Rule 26 on the appellant was imposed consequential to the demand of duty on M/s Sterlling Biotech Ltd. 4.1 On examination of the case on merit of M/s Sterlling Biotech Ltd, we find that the dispute is on the exemption entry of the goods in question whether the same would fall under description (A) or (B) of Sr. No. 108 of Notification No. 12/2012-CUS. We find that description (A) grants exemption to drugs and medicines specified in the list No. 3 and 4 of Customs exemption Notification 12/2012-Cus and description (B) provides exemption to bulk drugs used in the manufacture of goods mentioned at (A). The point of dispute is only that whether the drug mentioned at description (A) covers the bulk drugs manufactured by the appellant namely Idarubicin hydrochloric acid, Doxorubicin hydrochloric acid, Daunorubicin hydrochloric acid, Epirubicin hydrochloric acid, Zoledron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itled to exemption unconditionally. 7. We also find that the revenue has no case that the disputed consignments had not been utilized in further production of medicines by the consignee. The assessee was forced to make clearances for further manufacture without the buyer producing the requisite certificate as the jurisdictional Asstt. Commissioner of the buyer firm had not granted the said certificate and had informed them that such certificate was not necessary. In the circumstances, the reliance of the assessee on the decision in the case of M/s. Sundaram Fasteners Ltd. v. CCE [1987 (29) E.L.T. 275 (Tri.-Delhi)] in respect of the claim for the benefit carries considerable force. In the said decision, it was held that the condition which was impossible to comply with because of the action of the revenue should be taken to have been dispensed with. We also note that there is substantial compliance with the requirement of the rules by the assessee. 8. The respondents have relied on the following case law :- (a) Final Order Nos. 979 and 980/2008 dated 21-8-2008 - 2009 (233) E.L.T. 372 (Tri.) of the Bangalore Bench of the Tribunal in the case of M/s. Astrix Laboratories Ltd. others v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng these to be bulk drugs, they cannot be precluded from claiming the exemption for life saving drugs in respect of the very same impugned goods . 11. In M/s. Cipla Ltd. case (supra), the Tribunal was concerned with the scope of the exemption extended to goods figuring at Sl. No. 80 of the table to Notification No. 21/02-Cus, which was as follows : - Sl. No. Chapter or Heading No. or sub-heading No. Description of goods Standard rate Additional duty rate Condition No. 1 2 3 4 5 6 80 28, 29 or 30 The following goods, namely (A) Drugs, medicines, diagnostic kits or equipment specified in List 3 (B) Bulk drugs used in the manufacture of drugs or medicines at (A) above. 5% 5% -- -- -- 5 The Tribunal observed that undisputedly bulk drugs imported by the appellants found mention in the List 3 referred to at Sl. No. 80(A). It was held that the impugned bulk drugs were liable to be considered as drugs mentioned at Sl. No. 80(A). It was beyond doubt that bulk drugs were also drugs . They were so defined under the Drugs (Prices Control) Order, 1995 also. The imported goods which were specified in List 3 must fall within the coverage of the drugs specified in List 3 and consequently the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the two respondents herein, being employees of the two companies, were liable to be penalized as recorded in order in original made by the Commissioner. 2. Heard the learned counsel for the appellant. 3. By two separate orders of even date, appeals of revenue in case of two companies have been admitted on a substantial question of law as to the correct interpretation of conditions stipulated by the aforesaid notification, more particularly condition No. (vii). In light of the impugned order of Tribunal, it is apparent that the question cannot be said to be free from doubt and in the circumstances, insofar as the employees are concerned, at least, the order of the Tribunal deleting penalties, does not require interference. 4. Accordingly, both the appeals are dismissed. Order in OJCA No. 418/2007 419/2007 Both the civil applications are not required to be entertained and are accordingly disposed of in light of the orders made in the appeals. The above judgement of the Hon ble Gujarat High Court has been upheld by the Hon ble supreme court reported as Commissioner Vs. S K Shah 2010 (255) ELT A50 (SC). 5. As per our above discussion and findings which is based on direct judgments o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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