TMI Blog2000 (10) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellants entered into a contract with the second appellant M/s. Albert David Ltd. (hereinafter referred to as M/s. ADL) for manufacture of the said tablets out of the raw materials and packing materials supplied by M/s. ADL. As per the terms of the contract, the entire quantity of the finished product was to be supplied by Vax Institute Laboratory Ltd. to M/s. ADL and M/s. Vax Institute Laboratory was to claim job charges only. The appellant was clearing the said medicines by claiming the benefit of small scale exemption Notification No. 175/86 in terms of the approved classification list. 4.On the basis of the above facts, a show cause notice dated 21-2-1991 was issued to the appellant alleging that M/s. Vax Institute Laboratory manufactured the product in question using the Brand Monogram of M/s. ADL on the label of the said product. Hence the said company came under the purview of the Notification No. 223/87-C.E., dated 22-9-1987 and the Anaflam tablets manufactured by the said company was not entitled to the benefit of Notification No. 175/86-C.E., as amended. Accordingly, M/s. Vax Institute Laboratory was called upon to show cause as to why the duty of Rs. 16,05,200.29 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies. 6.Shri S.K. Bagaria, ld. Advocate appearing on behalf of the second appellants M/s. Albert David Ltd. argued on the merits of the case also, when he was reminded that he is concerned with the imposition of penalty under Rule 209A only as the duty has been confirmed against M/s. Vax Institute Lab. who have argued only on the point of limitation. Accordingly, Shri Bagaria confined his argument only on the penalty imposed on M/s. ADL. He submitted that none of the conditions for invoking the provisions of the said rule against the appellants existed or satisfied. M/s. ADL was not in any way concerned with the manufacture of the said Anaflam tablet or on the question of determination of the assessable value of the said tablet. All these were liabilities and responsibilities of M/s. Vax Institute Laboratory. M/s. ADL cannot be held responsible for any short payment of duty on the tablets manufactured by M/s. Vax Institute Laboratory and there could not be no question of M/s. ADL having any knowledge or belief as contemplated by or provided under Rule 209A. In case there was any irregularity as regards the availment of exemption notification by M/s. Vax Institute Laboratory, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. ADL does not convince us. Apart from the fact that in all the C/Lists effective from 7-4-1987, 17-3-1988, 26-4-1988 it has been mentioned by the appellants that "labels have been approved and the labels have not been attached herewith". Earlier C/List dated 1-3-1986 has not been placed before us and as such it cannot be found as to whether the labels were submitted along with that C/List or not. There is a finding that no labels were given to the Department. We observe that even if they were given with the earlier C/List dated 1-3-1986, the appellants were duty bound to give the same along with the agreement in each and every C/List subsequently. Even otherwise we find that the label merely declares as "manufacture by Vax Institute Laboratory, Deganga, 24 Parganas, West Bengal, in cooperation with M/s. Albert David Ltd., 15 Chittaranjan Avenue, Calcutta - 700072 (India)." From the above markings on the labels nobody can make out that the goods have been manufactured by the appellants under an agreement entered into between them and M/s. ADL. As such filing of the labels along with the C/Lists is not sufficient to set aside the finding of the suppression against the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p with M/s. Albert David. I find in this connection that ld. Collector has, in his finding, himself referred to the fact that labels were submitted along with the earlier forms and does not deny that the labels had been approved. Ld. Counsel, has emphasised that the appellants had filed labels for approval and they have been approved and has also drawn attention towards the samples filed before the Tribunal. A perusal of these labels shows that they clearly bear the inscription as under : "Each tablet contains Ibuprofen B P 400 mg Paracetamol IP 325 mg ---------------------------------Schedule H. Drug--------------------------------------------- Warning : To be sold by retail on the prescription of a Registered Medical Practitioner Only ------------------------------------------------------------------------------------------------------ Mfg. By MFG. LIC. NO. DL 993M VAX INSTITUTE LABORATORY LTD. Deganga, 24 Parganas, (W.B.) In co-operation with ALBERT DAVID LIMITED 15 Chittaranjan Avanue, Calcutta - 700 072 " The carton also bears the following : "Manufactured by Vax Institute Laboratory Ltd. Deganga, 24 Parganas, West Bengal Mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished if so considered necessary. 20.In the present case, the very indication on the labels to the effect that the item has been manufactured in cooperation with M/s. Albert David shows that there was and must have been an agreement between the two parties and it was open to the officers, to have called for the same if so required. In fact, the endorsement of verification by the officer, and approval by the Asstt. Collr. could only be taken to mean that they had undertaken such verification or enquiries as was necessary and was satisfied that the benefit of exemption claimed was available and that is why it was decided to approve the C/Lists after seeing the labels. 21.Hence looking to the totality of the facts and circumstances, I consider that the appellants were entitled to the benefit of doubt and it will be unfair to allow the penalty to be retained in these circumstances. 22.Since the appellants M/s. Vax Institute have given up their case on merits, therefore, I am not interfering at this stage with the demand for duty on the ground of merits. But I hold that the demand is hit by time-bar and in the circumstances of the case, the penalty was also not got justified. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department, and on such a disclosure only the C/Ls. and the labels were duly approved by the Department. He submits that through the aforementioned classification lists and labels, the Department had been well aware of the relationship between M/s. Vax Institute and M/s. Albert David. Hence, he argues that the allegation of wilful mis-statement and suppression of fact is untenable and unjustified. He, therefore, vehemently pleads that the entire demand against M/s. Vax Institute is hit by time-bar and there are no adequate grounds to impose penalty on them. He supports the findings recorded in the order of the learned Vice President. 27.Shri R.K. Roy, learned JDR appearing for the Revenue, while reiterating and supporting the findings of the learned Member (Judicial), submits that M/s. Vax Institute failed to disclose the relevant facts before obtaining approval of the classification lists and the labels in question. He points out that at no point of time before such approval M/s. Vax Institute had disclosed to the Department that they have entered into an agreement with M/s. Albert David for manufacture and supply of the tablets. He, therefore, argues that the plea of time-bar a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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