Judgment:
1. Order-in-Original No.4/Commr/M-I/2001 dt.17.1.2001 passed by Commissioner of Central Excise, Meerut-I is under challenge. By that order. Commissioner adjudicated on the issue raised by SCN dt.4.8.2000.
As per SCN, differential duty amounting to Rs.3,81,99,257 was demanded in relation to removal of PACLITAXEL consumed captively during the period from 2.9.94 to 22.4.97.
2. The claim putforth in the SCN was disputed by the manufacturer.
According to them, the goods involved in the case which were captively consumed were valued at Rs.8,000 per grams and that sales effected of negligible quantity to other institutions for the purpose of analysis or otherwise cannot be the basis for computing the value of the quantity captively consumed. It was the further contention of the manufacturer that the alleged evasion of duty was found of by the Department on the basis of statutory documents maintained by them which were regularly submitted to the authorities. Those documents actually revealed the value at which negligible quantities were sold to outside parties. Since those gate passes mentioned higher rate at which those negligible quantities were sold it cannot be said that there was any suppression of materials with intention to evade payment of duty.
Consequently, it was argued that Department was not justified in invoking the extended period of five years.
3. These contentions raised by the manufacturer were not accepted by the adjudicating authority. By the impugned order, he confirmed the demand made in the SCN. The adjudicating officer also imposed a penalty invoking the provisions contained in Section 11AC of the Act. Over and above the penalty under Section 11AC, a penalty of Rs.2 crores was also imposed on them by invoking the provisions contained in Rule 9(2) and Rule 52A(8).
4. Ld. Counsel representing the appellant placed the following contention: 1. Commissioner erred in computing the value of the goods at Rs.29,000/- per gram by averaging the prices at which negligible quantities were sold for the purpose of analysis.
2. The second contention raised by him was that since differential duty is based on the statutory documents maintained by the manufacturer and supplied to the Excise authorities, extended period of 5 years would not have been invoked.
3. Thirdly, it was argued that the period involved in this case being from 2.9.94 to 2.4.97, Commissioner was in error in invoking the provisions contained in Section 11AC which came into the statute book on 29.8.96 in relation to transactions which took place prior to this date.
4. Lastly it was argued that Rules 9(2) and 52A(8) were not in the statute book when the SCN was issued on 4.8.2000, those rules having been deleted on 12.5.2000 the Commissioner was not empowered to impose any penalty invoking the non-existing provisions in the Rules.
5. We have heard Ld. DR According to him, sales of this particular drug to institutions were made as though they were extra pure, all the invoices and gate passes issued in relation to such institutions described the goods as PACLITAXEL extra pure. His argument is that this description with the addition of word 'Extra pure' was to make the goods covered by them different from the goods captively consumed. It has come out in evidence that goods captively consumed and the goods wold with the description extra pure were identical. Consequently, by adding the word extra pure, the manufacturer tried to misled the officers of the Excise Department. As a result of this action, according to him, according to him, there was justification for invoking the provisions contained in proviso to Section 11A(1) of the Act. On the question of averaging the value of the goods at Rs.29,000/- per gram, Ld. DR tried to justify the Commissioner; but we were not impressed with this submission. Regarding imposition of penalty under Section 11AC in relation to transaction which took place prior to 28.9.96, the legal position is settled and the Commissioner could not have done that. Provisions of the Rule which were not in force on the date of a SCN and on the date of adjudication, prima-facie could not have been invoked for levying the penalty of Rs.2 crores.
6. Value of Rs.8,000/- per gram shown by the appellant for paying duty on the concerned goods does not appear to be correct. Without further eloberating on this issue for the time being, we direct the appellant to deposit 1/4th of the differential duty demanded by the impugned order, as per the provision under Section 35F of the Ac. The amount to be deposited is rounded of as Rs.96 lakhs. This deposit must be made within a period of six weeks from today. On such deposit, recovery of the balance amount covered by the impugned order including penalities will stand stayed till the final disposal of the appeal. The stay petition is ordered accordingly.