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M/s. Orchid Healthcare Versus CCE, Chennai –III

2015 (8) TMI 149 - CESTAT CHENNAI

Penalty u/s 11AC - valuation of physician samples - Intention to evade duty - willful mis-statement or suppression of facts - Held that:- Appellant-assessee was paying excise duty on cost construction method ever since they started clearing physician samples of P&P medicines and there was no provision in ER-I return to provide such information. The appellants have maintained that there is no intention on their part to evade central excise duty inasmuch as physician samples have been cleared on p .....

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TMI 1192 - MADHYA PRADESH HIGH COURT), the impugned order insofar as it pertains to imposition of penalty of ₹ 7,92,529/- under Rule 25 is set aside - Decided in favour of assessee. - Appeal No. E/362/2011 - Final Order No. 40778 / 2015 - Dated:- 15-7-2015 - Shri P.K. Choudhary, J. For The Appellant : Shri M. Kannan, Advocate For The Respondent : Shri B. Balamurugan, AC (AR) M/s. Orchid Healthcare Ltd. Unit - II, a division of Orchid Chemicals & Pharmaceuticals Ltd. are manufacturers o .....

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le 8 of the Central Excise Valuation Rules, 2000 consequent upon the above findings. (ii) I confirm the demand of ₹ 7,92,529/- (Rupees seven lakhs ninety two thousand five hundred and twenty nine only) on M/s. Orchid Healthcare - Unit II under sub-section (2) of Section 11A of the Central Excise Act,1 944 read with sub-section (1) of Section 11A of the Central Excise Act, 1944. (iii) I appropriate the amount of ₹ 7,92,529/- (Rupees seven lakhs ninety two thousand five hundred and twe .....

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42,89,074/- made in the show cause notice No. 35/2010 dated 28.4.2010 being barred by limitation of time. (vii) I drop the interest under Section 11AB of Central Excise Act, 1944 on the duty dropped at (vi) above. (viii) I drop the penal proceedings initiated under Section 11AC of the Central Excise Act, 1944 in the above Show Cause Notice No. 35/2010 dated 28.4.2010. (ix) I drop the penalty proceedings initiated under Rule 25 of the Central Excise Rules, 2002 in the above Show Cause Notice No. .....

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contended that the Commissioner has dropped the demands for the period prior to 1.8.2008 and the Commissioner has confirmed differential duty only for the normal period of limitation. While doing so, the Commissioner has also imposed penalty of ₹ 7,92,529/- under Rule 25 and dropped the penal proceedings under Section 11AC of Central Excise Act, 1944. The learned counsel has relied on the decision of the Hon ble High Court of Gujarat in the case of Commissioner of Central Excise & Cust .....

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roducer, manufacturer, registered person of a warehouse or a registered dealer,- (a) removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under section 6 of the Act; or (d) contravenes .....

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ed, or [rupees two thousand], whichever is greater. 16. The Tribunal considering Rule 25 has observed in its order that Rule 25 provides for imposition of penalties which shall not exceed the duty on the excisable goods, when there is contravention of the nature referred to in clause (a), clause (b), clause (C) or clause (d). The Tribunal found that clause (a) of Rule 25 refers to removal of excisable goods in contravention of any of the provisions of the Rules. When goods were removed, no excis .....

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d goods without applying for registration. Clause (d) refers to contravention of any of the provisions of the Rules with intent to evade payment of duty. Excisable goods were entered in records, cleared on Central Excise invoices and duty was also paid subsequently, though belatedly along with interest. As such, the said clause (d) is also not contravened. After analyzing and examining all these four sub-clauses of Rule 25, keeping in mind the facts of the case, the Tribunal held that the invoca .....

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any willful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11AC, shall also be liable to pay a penalty equal to the duty so determined. For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short-levied or short-paid or the refun .....

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decision of the Hon ble High Court of Madhya Pradesh in the case of Shree Ashok Kumar Manibhai Patel & Co. Vs. CCE, Bhopal - 2015 (317) ELT 431 (MP). The learned counsel reiterated that in view of the decision of the Hon ble High Courts and also in view of the findings of the adjudicating authority, it is apparent that there was no fraud, collusion or any willful mis-statement or suppression of facts or contradiction of any of the provisions of the Act or the Rules made thereunder with inte .....

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Supreme Court reported as 2007 (215) ELT 327 (SC). He further submitted that there is a Board s Circular No. 813/10/2005-CX dated 25.4.2005 wherein it has been clarified that in respect of samples that are cleared for free distribution by the physicians the value shall be determined under Rule 4 of Central Excise (Valuation) Rules, 2000 that is proportionate to the price of their commercial tax cleared under section 4A of the Central Excise Act, 1944 since P&P medicaments are subject to MRP .....

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