TMI Blog2013 (1) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the value of such goods should be determined under Rule 6(b)(ii) of Central Excise Valuation Rules. He also upheld the demand on account of credit short reversed under Rule 57CC. But he allowed utilization of an amount of Rs. 32,561/- which had expired in their credit account when they switched over from a duty paying unit to an exempted unit at the beginning of a financial year when they re-started availing small scale exemption. Aggrieved by the order of the Commissioner (Appeals) Revenue has filed this appeal before the Tribunal. 5. The submission of the Revenue is that the respondent have been replacing defective goods under challan-cum-invoices without corresponding excise invoices and were also clearing physician samples under challan-cum-invoices without corresponding central excise invoices and not paying excise duty. Since Excise duty has to be paid on such clearances of goods whether or not the respondents have billed for and realized prices of such goods, the reasoning given by the Commissioner (Appeals) for coming to the conclusion that there was no clandestine removals is faulty and not legally maintainable. Revenue points out that the proceeding before lower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y thought that they did not have to pay excise duty. The respondents claim that they were under the bona fide belief that they did not have to pay any excise duty on such goods. Ld. Counsel further submitted that in the matter of replacing defective goods, there were decisions of the Tribunal to the effect that such goods can be considered as quantity discount and no excise duty would be payable. He relies on the following decisions in the matter : 1. CCE, Chennai v. Hindustan Lever Ltd. - 2002 (142) E.L.T. 513 (S.C.) 2. CCE, Bombay v. Spectrum Pharmaceuticals - 2000 (119) E.L.T. 737 (Tribunal) 3. Raptakos Brett Co. v. CCE, Bombay - 1998 (99) E.L.T. 176 (Tribunal) 4. Ponds India Ltd. v. CCE - 2000 (124) E.L.T. 202 (Tri.). 10. He submits that in view of the above decisions, respondents were under the bona fide belief that on goods cleared for replacing defective goods there was no requirement of paying any excise duty. He conceded that this issue has been decided against the respondents in the judgment of the Apex Court in the case of ECE Industries Limited v. CCE - 2004 (164) E.L.T. 236 (S.C.). 11. The Counsel is raising the issue that the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on a clarification issued by C.B.E. C. In the case of Chemphar Drugs there was an approved classification list and it was a during a time when the officers were regularly visiting the assessees. The nature of excise levy and collection itself has changed to self assessment and voluntary compliance and hence these decisions are not applicable to the facts of the case and the decision of the Apex Court in the case of Kalvert Foods (supra) is more appropriately applicable. Further in this case, this pleading was not allowed by the Commissioner (Appeals) for physicians samples and the respondent has not come in appeal. So there is no question of giving any relief in the matter of liability of duty on physicians samples. 16. Now we come to the other issues raised by both sides. 17. In the case of valuation of physicians samples the question is settled by the decision of Larger Bench of the Tribunal in the case of Blue Cross Laboratories Ltd. (supra) and therefore the decision of the Commissioner (Appeals) that the value should be determined based on cost construction method is legally not correct and we order that value should be determined as decided by the Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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