CX - Notfn 245/83-CE - abatement of 15% prescribed is command: CESTAT by Majority
By TIOL News Service
MUMBAI, MAR 08, 2017: 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 lists 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.
When the appeal filed before the Tribunal came up for hearing last year, the appellant submitted that being a very old case the documents could not be traced out and hence cannot be produced before the Bench.
Whereas the Member (J) observed that the demand is time barred and, therefore, the appeal needs to be allowed, the Member (Technical) observed that if the appellant have claimed that the prices are covered by the DPCO 1987, then they should be able to give evidence . Relying on the provisions of 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 that it appeared that a wrong claim has been made with intent to avail benefit and it amounts to fraud and, therefore, approval of price list under Central Excise Law cannot come in the way of justice. Inasmuch as the Member (T) viewed that the appeal is required to be dismissed.
And so, the matter was referred to the third Member for a Majority decision.
We reported this order as 2016-TIOL-1286-CESTAT-MUM.
The third Member (Technical) on reference took the following view -
+ Appellant submits that the price lists furnished by them were filed in the format prescribed for such products as have prices fixed by law and that the declaration in the list were not required to be supported by any documentation.
+ It would appear that the claim of the appellant cannot be controverted. Approval of price lists is a statutory process and, with such approval, the declared price attains finality. Thereafter, the approved price list can be questioned only by a legal challenge. That has not occurred in the present instance. The notice, the order of original authority and the impugned order are bereft of any finding of suppression of relevant facts in the declaration filed under rule 173C of Central Excise Rules, 1944. That lack would foreclose the option to invoke the extended period.
+ Notification no. 245/83-CE is not a privilege but a necessary appendage of the prescription in rule 173C that list price under Drugs (Prices Control) Order, 1987 must be declared. It must necessarily follow that abatement of 15% in the notification is a command and not a contention . In these circumstances, the allegation in the notice that appellant was not eligible for the so-called exemption fails.
+ Even if the appellant was not covered by the Drugs (Prices Control) Order, 1987, it would appear that ‘normal price' should have been determined by the proper officer in accordance with the Valuation Rules. No evidence of such an exercise having been undertaken is apparent from the records.
Holding that there has been no suppression in the records furnished by the appellant to proper officer, the finding on the demand being hit by limitation as recorded by Member (Judicial) was concurred with.
And so, the Majority order is that the demand was set aside and the appeal was allowed with consequential relief.
Quick reference - Notfn. 245/83-CE dated 13.09.1983 as amended:
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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.
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(See 2017-TIOL-735-CESTAT-MUM)
