2023 (5) TMI 383 - AT - Central Excise

Demand of short paid duty - Levy of penalty under Rule 209 A of erstwhile Central Excise Act, 1944 - non-inclusion of cost of Royalty towards technical knowhow borne by M/s Wintac is includible in the assessable value of medicament viz. Reclavin Injection - HELD THAT:- There is no dispute that the buyer of the medicament M/s Wintac has purchased technical knowhow on payment of consideration and the said technical know how was allowed to be used for manufacture of Recalvin Injection by M/s Norris. Therefore, the goods “Reclavin Injection” was manufactured with the technical knowhow which was provided by Wintac for which substantial cost was borne. Since the Wintac is the buyer of the goods and the goods has been manufactured by use of technical knowhow by Norris and such technical knowhow involves a cost such cost should be included in the assessable value of overall manufacturing of medicament. It is admitted fact that the value of technical knowhow was escaped while arriving at the transaction value, there is under valuation of medicament “Recalvin Injection” - there is short payment of duty in respect of medicament “Recalvin Injection”. Hence, the demand was rightly confirmed.

Penalty under Rule 209 A of erstwhile Central Excise Rules, 1944 imposed on Wintac Ltd - HELD THAT:- The penalty under rule 209 A can be imposed only on natural person for the reason that all the activities for which the penalty is imposable can be carried out by a natural person and not by the company - issue covered by the decision in the case of STEEL TUBES OF INDIA LTD. VERSUS COMMISSIONER OF C. EX., INDORE [2006 (10) TMI 146 - CESTAT, NEW DELHI [LB] where it was held that penalty can not imposed on corporates under rule 209 / Rule 26 of the Central Excise Rules, 2002.

The appeal filed by M/s Norris Ltd is dismissed and appeal filed by M/s Wintac is allowed.