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2019 (5) TMI 43 - CESTAT HYDERABADValuation - supply of designated medicines to various hospitals at rate contract - price escalation clause - the medicines were sold by the assessee to their distributors at a lower rate and thereafter the distributors supplied the goods to hospitals at higher rates as per the rate contract - Section 4 of CEA - HELD THAT:- The invoices were issued by the appellant on their distributors, which has a transaction value. In turn, the distributor sold the medicines to DMER at higher transaction value. The question of normal price under Sec.4 as it stood prior to 2000 does not apply when there is a transaction value. The show cause notice is entirely based on old Sec.4 which does not apply to the period in question. Therefore, the demand under Sec.11A has to fail on this ground alone. Demand u/s 11D of CEA - HELD THAT:- Prior to Finance Act, 2008, only such persons who are liable to pay duty had to deposit any amount collected as representing duty. This left persons who were not required to pay excise duty and still collected some amount as excise duty scot free - Since the entire period is prior to 2008 and the allegation is that the amounts were collected by the distributors of the assessee and not by the assessee themselves as representing excise duty, the demand under Sec.11D does not sustain against the appellant/assessee. The demand also does not sustain against the distributors because prior to 2008, persons who are not liable to pay excise duty were not covered by Sec.11D. The entire demand under Sec.11A and Sec.11D along with interest and penalties need to be set aside - penalty on the Managing Director of the assessee also needs to be set aside. Appeal allowed - decided in favor of appellant.
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