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MartIn and Harris Laboratories Vs. Commissioner of C. Ex. - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Judge
Reported in(2005)(185)ELT421TriDel
AppellantMartIn and Harris Laboratories
RespondentCommissioner of C. Ex.
Excerpt:
.....had been reconciled by the appellants and there existed no discrepancies. he had even dropped the duty demand for these years. for the previous years (1988-99), he has confirmed the duty by not accepting the explanation of the appellants regarding the discrepancies found in the balance sheets and the rt-12 returns. according to the appellants, the discrepancies took place on account of the fact that varieties of tablets were packed in strips of varying quantity, some strips 2-10 while others contained 12-20 or even 30 tablets. similarly, the liquid bottles had different capacities, such as, 60 ml., 100 ml. or even 200 ml. the mistake occurred while converting or computing the total production by the officers/official who prepared the balance sheets in the head office.there is not an.....
Judgment:
1. In this appeal, challenge has been made by the appellants to the impugned order-in-original dated 25-10-2004 vide which the adjudicating authority (Commissioner of Central Excise) has confirmed the duty demand with penalty, as detailed therein, for the period 1998-99 to 2001-02, against them.

2. The appellants are engaged in the manufacture of Patent or Proprietary Medicaments other than those medicaments which are exclusively Ayurvedic, Unani etc. They had been paying duty @ 16% ad valorem by classifying their products under Chapter sub-heading 3003.10 of the CETA. The duty had been confirmed against them for the years 1997-98 to 2001-02 on the ground that production of the medicines, such as, Tablets, Capsules & Syrup shown in the balance sheets of all these years was much more than as reflected in the RT-12 returns. Before confirming the demand, they were served with a show cause notice wherein this ground was alleged and suppression of production was attributed to them. The appellants, however, denied the allegations of suppression of production and maintained that genuine mistakes took place in preparing the balance sheets by the officers at the Head Office of the appellants' company and that there was no evasion of duty on their part. The adjudicating authority, however, did not accept their explanation and passed the impugned order.

3. The learned Counsel has contended that there is no tangible evidence on the record to prove the suppression of production of the medicines by the appellants and removal/clearance of the same in a clandestine manner without payment of duty in the market. The charge of clandestine removal of the goods, according to the learned Counsel, could not be based solely on the basis of discrepancies in the balance sheets and the RT-12 returns. He has also contended that extended period of limitation could not be invoked as the balance sheets of the appellants' company are public documents and no suppression of any information regarding the production could be attributed to them.

Therefore, the impugned order on merits as well as on the ground of limitation deserves to be set aside.

3. On the other hand, the learned SDR, has reiterated the correctness of the impugned order.

4. We have heard both sides and gone through the record. We find that the allegations of suppression of production and removal of the goods without payment of duty in a clandestine manner had been based solely on the basis of some discrepancies found in the balance sheets of the appellants' company for the years in dispute regarding the production and in the RT-12 returns filed by them in those years. In the balance sheets, the production shown was more than that was reflected in the RT-12 returns by them. But, we find that the adjudicating authority in the impugned order has observed in these words "that he was of the view that there was genuine mistake in preparing the balance sheets and the same should be overlooked". He has also observed that the discrepancies in the RT-12 returns vis-a-vis balance sheets regarding the production for the years 1999-2000 and 2000-2001, had been reconciled by the appellants and there existed no discrepancies. He had even dropped the duty demand for these years. For the previous years (1988-99), he has confirmed the duty by not accepting the explanation of the appellants regarding the discrepancies found in the balance sheets and the RT-12 returns. According to the appellants, the discrepancies took place on account of the fact that varieties of tablets were packed in strips of varying quantity, some strips 2-10 while others contained 12-20 or even 30 tablets. Similarly, the liquid bottles had different capacities, such as, 60 ml., 100 ml. or even 200 ml. The mistake occurred while converting or computing the total production by the officers/official who prepared the balance sheets in the Head Office.

There is not an iota of evidence on the record to prove the clandestine clearance of the goods by the appellants without payment of duty in the market during these years in dispute. None from the market has come forward to accept the purchase of the goods/medicines, from the appellants' company without payment of duty during these years. There is also no evidence to prove the excess receipt of inputs by the appellants' company during these years from outside. No unaccounted goods were also detected and seized from the factory of the appellants.

In the absence of such an evidence, in our view, the balance sheet could not be taken as a sacrosanct documents for proving the allegations of clandestine production and removal of the goods by the appellants and thereby evasion of duty by them.

5. Apart from this, the extended period of limitation for raising the demand from the years 1998-99 through a show cause notice dated 26-8-2003 could not be invoked. There was no suppression of material facts by the appellants as the balance sheets prepared by them were publically available documents and copies of the same were sent to the Revenue also. The duty demand raised is apparently time-barred. In this view, we are fortified by the ratio of the law laid down in the case of Hindalco Indus. Ltd., v. CCE, Allahabad, 2003 (161) E.L.T. 346 (T), wherein also the demand was raised on the basis of the information appearing in the balance sheet of the assessee/company after invoking the extended period of limitation. But it was ruled that extended period could not be invoked as the balance sheets were publically available document and the demand was held to be time-barred against the assessee. The case of the appellants also stands squarely covered by this ratio of the law laid down in that case.

6. In view of the discussion made above, the impugned order is set aside and the appeal of the appellants is allowed with consequential relief, if any, permissible under the law.


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