TMI Blog2019 (5) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... when there is a transaction value. The show cause notice is entirely based on old Sec.4 which does not apply to the period in question. Therefore, the demand under Sec.11A has to fail on this ground alone. Demand u/s 11D of CEA - HELD THAT:- Prior to Finance Act, 2008, only such persons who are liable to pay duty had to deposit any amount collected as representing duty. This left persons who were not required to pay excise duty and still collected some amount as excise duty scot free - Since the entire period is prior to 2008 and the allegation is that the amounts were collected by the distributors of the assessee and not by the assessee themselves as representing excise duty, the demand under Sec.11D does not sustain against the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant firm appointed distributors. Thereafter they cleared the goods to their distributors who, in turn, supplied the goods to various hospitals as per the rate contract. Evidently, the medicines were sold by the assessee to their distributors at a lower rate and thereafter the distributors supplied the goods to hospitals at higher rates as per the rate contract. The revenue issued a show cause notice demanding differential duty for the period 2003-04 to 2006-07 under Sec.11A(1) on the ground that assessee undervalued the goods and therefore, differential duty of ₹ 6,78,513/- has to be recovered from them. This demand was arrived at taking the value at which the distributors supplied the medicines to the hospitals. Secondly, due to rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion value and the distributors were not created by them artificially but it was a part and parcel of the tender notice floated by the Government of Maharashtra itself. Evidently, if a distributor is appointed, he will need his margin and will not render free service. Sale to the Government of Maharashtra is as per the rate contract and the sale to the distributor has to be at a lower price. Exactly this was done by them and therefore there is no violation whatsoever. There is nothing on record to show that there was no transaction value between them and their distributors. On the question of Sec.11D, he would submit that there is no evidence whatsoever that they have collected any amount representing excise duty. During the relevant period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, it is clearly mentioned as clearance under from F which means clearances were made as stock transfer. As per the rate contract the goods intended to be supplied to the Government hospitals shall be labelled as for use of Government of Maharashtra . No products marked for Government of Maharashtra could be sold to public. When an authorized signatory of one of the distributors M/s Medicure was questioned, he explained that in reality there was no sale of goods by the appellant to distributors and it is only paper work. Shri Y.R. Mohan Rao, Managing Director of the appellant, in his statement dated 08.04.2005, confirmed that the goods were directly dispatched to actual Government institutions but the Central Excise invoices were issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the appellant won the tender to supply medicines to the Government hospitals as per rate contract awarded by DMER, Government of Maharashtra. The contract itself allowed the appellant to appoint distributors or supply medicines directly. The appellant chose to appoint distributors and raise invoices on them who in turn, would raise invoices on DMER as per the rate contract. Evidently, the distributor will not work for free and he needs a margin for his services. The invoices were issued by the appellant on their distributors, which has a transaction value. In turn, the distributor sold the medicines to DMER at higher transaction value. The question of normal price under Sec.4 as it stood prior to 2000 does not apply when there is a trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rry their case any further because the movement of goods to the distributors premises first and subsequently to the hospitals or directly from the assessee to the hospitals makes no difference as long as the two transactions are in place. 9. As far as the demand under Sec.11D is concerned, we do find that prior to Finance Act, 2008, only such persons who are liable to pay duty had to deposit any amount collected as representing duty. This left persons who were not required to pay excise duty and still collected some amount as excise duty scot free. Such persons could pocket the amounts so collected. This position has been modified in Finance Act, 2008. Therefore, as has been held by the Tribunal in the case of Mysore Agro Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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