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2013 (1) TMI 582 - AT - Central ExciseDemand - Clandestine removal - Intention to evade excise duty liability – Bona fide belief - Assessee is manufacturer of Patent and Proprietary medicines – Valuation of physician samples - Manufacturing both exempted products and dutiable products - Issuing two sets of invoices - One set called ‘central excise invoices’ for paying excise duty - Another set of invoices called challan-cum-invoices for other commercial purposes - Clear the goods under his challan-cum-invoice rather than under excise invoice – CENVAT Credit short reversed under rule 57CC of the Central Excise Rules, 1944 - Free replacements of defective goods without payment of duty - Assessee was not paying duty on goods which was cleared free Held that:- Following the decision in case of Kalvert Foods India Pvt. Ltd. (2011 (8) TMI 24 - SUPREME COURT OF INDIA) and we are not in agreement that the assessee entertained a bona fide impression that he need not pay excise duty on manufactured goods if it was cleared free. This is because the legal position that liability to excise duty arises when any goods are cleared from a factory whether for consideration or for free is a long settled issue. Further the excise liability on physician samples cleared free, was always known to the drug industry for decades. There were disputes only about method of valuation to be followed and not about the duty liability. The respondent is not a tiny manufacturer with no awareness of what happens in the industry. The fact that the respondent took care to clear the goods under his challan-cum-invoice rather than under excise invoice showing nil payment of duty shows his clear intent to evade excise liability. Valuation of physicians sample – Held that:- Following the decision in case of BLUE CROSS LABORATORIES LTD. (2006 (8) TMI 220 - CESTAT, MUMBAI) that goods have to be valued on the basis of value of identical goods. Free replacement of damaged/defective goods - Time expired medicines – Held that:- we hold that extended period of time could not have been invoked for demanding duty short paid. Demand on account of improper reversal of credit under Rule 57CC – Lapsed credit - Held that:- The liability is for the period before the lapsing of credit though determined after the date of lapsing. In such situation it is only proper that a set off on account of such lapsed credit is given because of such liability was determined correctly during the relevant time the credit would have been available for discharging such liability. In favour of assessee
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