2010 (5) TMI 871 - AT - Central Excise

Summary

Issues involved: Assessment of assessable value of physician samples distributed free of cost, invocation of longer period for demand, applicability of Board Circular, imposition of penalty.

Assessment of assessable value: The appellants, engaged in manufacturing pharmaceutical products, contested the demand on the ground of limitation, citing a Tribunal decision in a similar case. The issue on merits was already decided against them by a Larger Bench decision. The period involved was from April 2005 to March 2007, with the show cause notice issued on 01.5.2008. The advocate argued that the demand was beyond the period of limitation and should be allowed on the ground of time-bar.

Invocation of longer period: The Tribunal considered the submission that the matter was referred to the Larger Bench in April 2008, despite a Board Circular clarifying the issue. The Tribunal noted that even after the circular was issued, contradictory views persisted, indicating unsettled matters. The Tribunal held that since different interpretations were possible due to modifications in the circulars, the extended period could not be invoked, and penalty could not be levied. The appeal was allowed for the demand beyond one year, and the penalty imposed was set aside. The matter was remanded for working out the duty demand within the limitation period under Section 11A of the Central Excise Act, 1944.

Applicability of Board Circular: The Tribunal observed that the extended period would not be invoked when the matter is referred to the Larger Bench. It was emphasized that circulars issued by the Board were not binding on the assessee or the Tribunal, especially when different interpretations were possible. The Tribunal held that the demand in the present case was also barred by limitation, as per the precedent set in a similar case.

Imposition of penalty: The Tribunal set aside the penalty imposed on the appellants, following the principle that extended period and penalty cannot be levied when different interpretations are possible. The impugned order was overturned, and the appeal was allowed, with the stay petition and appeal being disposed of accordingly.