CX - Benefit of 15% discount on MRP claimed in price list as per Notfn 245/83 - whether prices were approved by DPCO - no evidence produced before lower authorities as well as Tribunal - whether claim is fraudulent and, therefore, extended period is invocable - Difference of Opinion: CESTAT
By TIOL News Service
MUMBAI, MAY 31, 2016: THE appellant is engaged in the manufacture of P&P medicines [Ch. 30] and availed 15% discount on Maximum Retail Price in terms of Notification No. 245/83-CE dated 13-09-1983. They had filed, during the relevant period, price list from time to time from August 1991 in respect of their final product. In the price lists, they claimed 15% discount on MRP to arrive at the assessable value u/s 4 of CESA, 1944.
As per the condition of the Notification, the retail price of the medicines which was claimed for concession should be specified in the DPCO 1979/1987.
In the show cause notice, it was alleged that the appellant while claiming the discount have withheld vital information inasmuch as they have not submitted the documents showing that the medicines have been specified in the DPCO 1987 and not declared at the footnote of the price list that the medicines figured in DPCO. Inasmuch as the appellant is not eligible for the discount, the Revenue contended.
The adjudicating authority confirmed the differential duty demand of Rs.49,81,952/- and which was upheld by the Commissioner (Appeals) in January 2005.
The appellant is before the Tribunal. This appeal was filed in the year 2005.
The appellant did not submit the price list referred to in the DPCO 1987 on the ground that being a very old case, the said documents could not be traced out.
The Member (J) observed -
| "6. …it is admitted fact that the appellant could not submit price list referred to in the DPCO 1987, however in the price list filed to the department, it was clearly mentioned that the MRP is as per the DPCO 1987, it shows that price declared in the price list is DPCO price. We find that the departmental authority have been approving the price list from time to time, despite knowing that, the appellant have shown DPCO prices in the price list and claimed the discount of 15% in terms of Notification No. 245/83. If at all the authority has any doubt regarding the DPCO price, nothing prevented the department to call for necessary documents before approval of the price list. In the notification, there is no condition that price list with reference DPCO 1987 is required to be submitted. We find that there is no suppression of the fact on the part of the appellant in as much as they have correctly declared all the details required in their price lists. Though the department is empowered to re-open the approval of price list, however the same can be done within one year or as the case may be five years depending on the facts whether there is any suppression of fact on the part of the appellant.” |
Holding that the demand is time barred, the Member (J) set aside the order and allowed the appeal.
The Member (T) had a differing view.
It was inter alia observed -
| "The appellants have failed to produce evidence to prove that their prices were approved under DPCO 1987. They have failed not only to produce such evidence not only before the lower authorities but also before the tribunal, claiming that it is old matter. I find that the demand pertains to the period 1991 to 1994 and the notice was issued in 1996. The appellants have not produced the evidence of approval under DPCO in 1996 or anytime thereafter. The reason given by the appellant that the matter is old does not hold much water. At the time when the notice was issued to the appellant, the matter was fresh, about two to five year old, therefore, the claim that they are not able to produce the said Price List as the matter is old is without any basis. While there is no condition that the DPCO price list is to be submitted along with the price list under Central Excise Rules, however it is responsibility of the appellants to make correct claim in the Price List. If they have claimed that the prices are covered by the DPCO 1987 then they should be able to give evidence.” |
Placing emphasis on section 106 of the Indian Evidence Act and citing the apex court ruling in Aafloat Textiles - 2009-TIOL-42-SC-CUS, the Member (T) further observed -
| "In absence of evidence to substantiate the claim that the prices are approved under DPCO, the assertion made on the price list submitted to revenue under Central Excise Law amounts to mis-declaration with intent to fraudulently avail the exemption. The only conclusion that can be derived from these facts is that they had made a wrong and fraudulent claim at the time of approval of Price List under Central Excise Law. Approval of price list by Central Excise authorities is subject to the truthfulness of the declaration contained therein. In the era of self removal procedure, the revenue places great reliance on the declarations made in the documents. The declarations are taken at face value. In the instant case, the appellants had in their price list under Central Excise Law, had claimed that the price of their products are covered by DPCO 1987…In the intent case it appears a wrong claim has been made with intent to avail under benefit and it amounts to fraud. In such a situation approval of price list under Central Excise Law cannot come in the way of justice." |
Holding that there is a clear evidence of mis-declaration and fraud with intent to wrongly avail the benefit of notification, the Member (T) concluded that the extended period of limitation had been rightly invoked and the appeal is, therefore, required to be dismissed.
In view of the difference in opinion, the Registry was directed to put the file before the President to resolve the issue, by reference to a third Member.
Quick reference - Notfn. 245/83-CE dated 13.09.1983 as amended:
In supersession of the Notification of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) No. 161/66- Central Excises, dated the 8th October, 1966, the Central Government hereby exempts Patent [or] Proprietary Medicines falling under Item No. 14E of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon under the said Act at the rate specified in the said First Schedule as is in excess of the amount of duty calculated on the basis of the value of the said medicines arrived at after allowing a discount of 15 per cent on the retail price of the said medicines specified in the price list referred to in the Drugs (Prices Control) Order, 1979 or the Drugs (Prices Control) Order, 1987, as the case may be , issued under Section 3 of the Essential Commodities Act, 1955 (10 of 1955):
Provided that the aforesaid exemption shall be allowed only if -
(i) no other deduction of discount from such retail price is claimed;
(ii) the said price list represents the retail price at which the medicines are ordinarily sold; and
(iii) the manufacturer claims exemption under this notification in respect of all the medicines cleared by him, the retail price of which [is] specified in the said price list.
Explanation. - In calculating the value of the said medicines the amount of excise duty payable, if any shall be deducted before allowing the discount from the retail price referred to in the said price list.
2. This notification shall come into force on the 13th day of October, 1983.
In passing: Eleven years and counting…
(See 2016-TIOL-1286-CESTAT-MUM)
