TMI Blog2023 (11) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... ) TMI 65 - SUPREME COURT] applying above discussed principles of interpretation and the meaning/purpose of word include . On reading column (3) of the impugned notification (Entry No. 37), it is observed that it talks about the medicaments manufactured exclusively in accordance with the formulae described in the authoritative books specified in the First Schedule to the Drugs and Cosmetic Act, 1940 or Homeopathic Pharmacopoeia of India or the United States of America or the United Kingdom or the German Homeopathic Pharmacopoeia, as the case may be, and sold under the name as specified in such books or pharmacopeia. The books mentioned in First Schedule are with respect to the Ayurvedic, Unani, Siddha Formulae. Hence, there is no ambiguity created by the legislature by using the word includes with the medicaments when medicaments prepared in accordance of books about Ayurvedic, Unani, Siddha are being discussed. From no stretch of imagination such medicaments can mean to include allopathic medicaments within their scope by the mere use of word include . More so, for the reason that there is no possibility of description of any formula for allopathic medicament in the books m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed partly. - DR. RACHNA GUPTA, MEMBER (JUDICIAL) AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Pravin Sharma, Advocate for the Appellant Shri Sanjay Kumar Singh, Authorized Representative for the Respondent ORDER This appeal is arising out of Order-in-Original No. 32/2020 dated 16.12.2020. The facts relevant for the disposal of the appeal are as follows: 2. The appellant is engaged in manufacturing of pharmaceutical products and was availing area based exemption from payment of central excise duty under Notification No. 49/2003 dated 10.06.2003 till 14.01.2015. On 14.01.2015, the appellant had applied for Central Excise Registration but was paying Central Excise Duty at the rate of 2% in view of Notification No. 01/2011CE dated 01.03.2011 as amended by Notification No. 16/2012-CE dated 17.03.2012. The department observed that the appellant was granted license dated 15.12.2004 renewed up to 14.12.2019 but for manufacture of drugs specified in Schedule C, C(1) and X excluding those of Schedule X to Drugs and Cosmetics Rules, 1945. Notification No. 01/2011-CE however exempts the excisable goods of the description specified in column (3) of the table ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used in Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systems and even Allopathic medicaments are eligible for the benefit of the impugned notification. It is also impressed upon that the language of notification is ambiguous and thus, the assessee cannot be held responsible for the same. Learned counsel has relied upon the decision in the case of Commissioner of Trade Tax Vs. SS Ayodhya Distillery [2009 (233) ELT 146 (SC)] 4.2 Learned counsel further submitted that the show cause notice dated 03.05.2019 has been issued by invoking the extended period of limitation despite that there is no suppression of any fact with mala fide intention on the part of the appellant. As everything was duly informed to the department even in the quarterly ER-8 Returns, the appellant clearly mentioned about availment of exemption under the said notification. The department had full knowledge of the claim, hence the extended period should not have been invoked. The demand is liable to be set aside on this ground of limitation. 4.3 Finally it is submitted that in case the confirmation of demand is opined justified then the amount of freight as paid may be deducted from the confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich credit of duty on inputs or tax on input services has been taken under the provisions of Cenvat Credit Rules, 2004. 6.1 The appellant admittedly has availed the benefit of Entry No. 37 of this notification. It reads as follows: Column no. 1 Column no. 2 Column no. 3 36 28 Potassium Iodate 37 30 Medicaments (including those used in Ayurvedic, Unani, Siddha, Homeopathic or Bio-chemic systems), manufactured exclusively in accordance with the formulae described in the authoritative books specified in the First Schedule to the Drugs and Cosmetics Act, 1940 (23 of 1940) or Homeopathic Pharmacopoeia of India or the United States of America or the United Kingdom or the German Homeopathic Pharmacopoeia, as the case may be, and sold under the name as specified in such books or pharmacopoeia 38 30 Intravenous fluids, which are used for sugar, electrolyte or fluid replenishment 6.2 No doubt chapter 30 as mentioned in column (2) is about all pharmaceuti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of the Act, must invariably be attached to these words or expression. It is this statement that Hon ble Apex Court has considered in Peerless General Finance and Investment Co. Ltd., (Supra) case. 6.3 Now we look back into the language in the notification column (3) of Entry No. 37 in use of word including in context of the content of column (3) of Entry No. 37 of the notification. But we are of the opinion that Tribunal ought not to have traversed beyond interpreting the provision as per the language employed in the statute itself. It is the settled proposition of law that while interpreting the taxing statutes the authorities cannot import which is not expressed in the provision itself. We rely upon the decision in the matter of Commissioner of Sales Tax, Uttar Pradesh Vs. Modi Sugar Mills Pvt. Ltd. ,[ AIR 1961 SC 1047] applying above discussed principles of interpretation and the meaning/purpose of word include . When we read column (3) of the impugned notification (Entry No. 37), we observe that it talks about the medicaments manufactured exclusively in accordance with the formulae described in the authoritative books specified in the First Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the exemption notification, it would have had to pay 6% duty instead of 2% but it would have been entitled to the benefit of CENVAT credit of 12% of the value of inputs. 7.2 Further, according to the appellant, the department had full knowledge of its claim of the exemption notification and it never raised any objection until 2018 when the audit was conducted. Therefore, according to the appellant, there were no grounds to invoke extended period of limitation in the matter. 7.3 Sections 11A(1) and 11A (4) of the Central Excise Act, as it stood at the relevant time, which deal with issuance of notices for recovery of date not paid or levied are reproduced below: SECTION 11A. Recovery of duties not levied or not paid or shortlevied or short-paid or erroneously refunded. (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful mis-statement 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, (a) the Central Excise Officer shall, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows: a) The appellant had itself declared in its ER 8 Returns and on the aluminum foils and boxes of the medicaments that they are were manufactured as per the Indian Pharmacopeia or British Pharmacopoeia. It further declared that on its medicaments that they were Schedule H drugs and marketed them as meant for Government supply and NOT FOR SALE and had not mentioned the maximum retail price (MRP). b) this shows that the appellant had full knowledge of the fact that it was not eligible for the exemption notification and yet cleared the goods claiming its benefit. c) therefore, the appellant appears to have wilfully contravened Rule 4, 6, 8 and 12 of the Central Excise Rules, 2002 with an intent to evade payment of duty. d) In an era of self assessment and self removal, the assessee is required to assess their duty liability correctly and is required to correctly discharge the same in the prescribed manner and the appellant deliberately wrongly availed the benefit of an ineligible exemption notification; e) Therefore, extended period of limitation under 11A (4) can be invoked because the appellant wilfully mis-stated as well as contravened the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny of ER-1/ER-2/ER-3 Returns within a fortnight of receipt submit the same to the Range officer along with his observations. The Preliminary scrutiny is to be carried out on the basis of guidelines/instructions contained in Return Scrutiny Manual To ensure date entry of returns and preliminary scrutiny of returns by the SO as per the guidelines/instructions contained in the Return Scrutiny Manual. He should also take necessary action for recommendation of units for detailed scrutiny and to carry out detailed scrutiny as per guidelines/instructions contained in Return Scrutiny Manual. 7.9 The Central Excise Manual published by CBEC on 17th May 2005 which is available on the website of CBEC devotes Part VI to SCRUTINY OF ASSESSMENT. Paragraphs 2.2,2.3 and 2.4 of this Part are reproduced below: 2.2 The Superintendent of Central Excise in-charge of the Range Office, with assistance of the Inspectors in-charge of the factory of an assessee, will scrutinize all the returns . They shall in selected cases, call all connecting documents including invoices and the records and scrutinize the correctness of assessment . 2.3. The Deputy/Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt cannot be upheld firstly because, operating under self-assessment is not one of the grounds for invoking extended period of limitation under the Act and secondly since every assesseee operates under self assessment, if extended period is invoked in every case, the provisions related to normal period of limitation become otiose. 7.13 The SCN clearly states that the appellant had mentioned on the packets, cartons, aluminium foils and in its returns very clearly the names of the allopathic medicines which it was manufacturing and also indicated that they were Schedule H drugs meant to be sold only on prescription and therefore, asserts thatit had full knowledge that it was not eligible for the exemption under the notification which shows that the appellant had wilfully mis-stated. Evidently, the appellant had NOT mis-stated any facts but only claimed the benefit of an ineligible exemption notification while self-assessing duty. Claiming the benefit of an exemption notification cannot, by any stretch of imagination, be called mis-statement, let alone, wilful mis-statement. 7.14 The SCN also alleged that the appellant had violated Rules 4,6,8 and 12 of the Central Excise Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r extended period of limitation because someone is in that line of business for any length of time. While the appellant was in this line of business, the department was in the business of issuing exemption notifications, applying them and scrutinising tax returns for a much longer period. In this case, even as per the SCN, the nature of the goods manufactured by the appellant was explicitly stated not only on the packets but also in the ER 8 Returns filed by the appellant. The irresistible conclusion is that the officer had not either scrutinised the returns or having scrutinised, did not issue the demand within time. 7.23 The appellant was only required to self-assess duty and file returns which it did. It had also declared to the department that it had availed the benefit of the exemption notification. There was not even an obligation on the appellant to seek any clarification from the department. In a recent decision of the Delhi High Court in Mahanagar Telephone Nigam Ltd. versus Union of India and others [W.P. (C) 7542 of 2018 decided on 06.04.2023] the Delhi High Court observed as follows: 32. As noted above, the impugned show cause notice discloses that the responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must be established and their existence cannot be presumed simply because the assessee is operating under self-assessment. 7.25 To sum up, the facts that the appellant was operating under self-assessment and that it was in the business of manufacturing pharmaceuticals are both not relevant to invoking extended period of limitation. The appellant was under no obligation to seek any clarification from the department during self-assessment as has been held by the Delhi High Court in Mahanagar Telephone Nigam Ltd. There is no mis-statement as all the facts have been correctly indicated in the ER-8 Returns filed by the appellant and also on the aluminium foils and packing of the goods even as per the SCN. The appellant had also not violated Rules 4,6,8 and 12 of Central Excise Rules 2002 as the appellant had self-assessed and paid duty and filed returns as per its understanding. The appellant had claimed the benefit of an exemption notification in its self-assessment which it was not entitled to. It has been the assertion of the appellant from the time of self-assessment up to and including in this appeal before us that it was entitled to the benefit this exemption notification. Wro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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