1. The facts of the case, in brief, are that on 10-8-1982 the Superintendent of Central Excise, Hyderabad issued a show cause notice to the appellants asking them to show cause why Central Excise duty of Rs. 1,54,006.18 should not be paid by them under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A(1) of the Central Excises and Salt Act, 1944 and why penalty should not be imposed on them under Rules 9(2) and 173-Q of the Central Excise Rules, 1944. The charge against the appellants was that they cleared clinical samples of P or P-Medicines falling under Item 14-E of the Central Excise Tariff without observing the conditions prescribed in Notification No.48/77-C.E., dated 1-4-1977. According to condition No. 3 of the said Notification, the clinical samples should be packed in a form distinctly different from regular trade packing and each smallest packing should be clearly and conspicuously marked "Physician's sample, not to be sold". It was alleged that the appellants did not satisfy this condition of the Notification and hence, they were -not entitled to clear the samples without payment of Central Excise Duty. The period covered by the Show Cause Notice related to September, 1977 to June, 1982. On adjudication of the case after observing the required procedure, the Collector held that in case of Cebexin, Sukcee Drops and Cemizol (Vet) the clinical samples did not qualify for exemption. In respect of these three medicines, the difference indicated between packing of clinical samples and trade; packing was as follows : i) CEBEXIN: Sample packs and commercial packs are put in identical glass bottles and in identical cartons. However, in the clinical sample there is a marking "Physician's sample, not to be sold", with extra white lines on the top and bottom. Sample packs do not indicate the number of tablets it contains, while in the case of trade pack, there is an indication that it contains 50 tablets.
(ii) SUKCEE DROPS: The sample pack bears the marking "Physician's sample, not to be sold". The trade pack contains an indication of the retail price, whereas no such price is marked on the sample pack. There is no other difference between the two forms of packings.
(iii) CEMIZOL (VET): Sample pack contains marking "Physician's sample, not to be sold". There is no other difference between two kinds of packing.
The Collector has held that a small difference in the information contained on the packings as between trade packings and clinical samples should not satisfy the condition that samples should be packed in a form distinctly different from regular trade packing. After inspecting samples of trade packings and clinical samples in respect of these three medicines, he has observed that it would be difficult to distinguish the trade packs from the clinical samples and hence clinical samples were not entitled to the exemption under Notification as the clinical samples were not packed in a form distinctly different from regular trade packing. Accordingly, he has held that duty was payable on the clinical samples cleared by the appellants in respect of these three medicines. He has also held that information furnished in the classification lists claiming exemption under Notification No.48/77-CE did not reflect details necessary for determining whether the conditions of that Notification were satisfied in respect of the sample packs of the medicines in question and in the absence of such information, approval of the classification lists should not have been denied and the same had been approved in the absence of the relevant details, which the party should have furnished. According to the Collector, there was suppression of information and therefore, demand for duty could be raised for the period of five years.
2. During the hearing before us, the learned Consultant for the appellants has argued on the legal ground of limitation as well as on the merits of the case. Arguing on the question of limitation, he has stated that show cause notice was issued on 10-8-1982 and the period covered by the show cause notice was from September, 1977 to June, 1982. Show Cause Notice was issued under Rule 9(2) of the Central Excise Rules and longer period of limitation of five years was invoked.
He has argued that there is no evidence of clandestine removal of the goods. The classification lists were filed from time to time and the same were approved. The benefit of Notification was claimed in the classification lists in respect of the clinical samples. The goods were removed under the gate passes and the copies of the same were submitted to the Central Excise authorities along with RT-12 Returns. Therefore, there was no suppression of facts or wilful mis-statement of facts. The Assistant Collector of Central Excise obtained samples in 1981, but the show cause notice was issued after one year of the submissions of the samples to him. Longer time-limit of five years was not applicable and demand for duty should be confined to six months as prescribed under Rule 10 of the Central Excise Rules and Section 11-A of the Central Excises and Salt Act, 1944. In support of his contention, learned Consultant has relied on this Tribunal's decisions reported in 1986(23) ELT 205 in the case of Tata Iron & Steel Co. Ltd., Jamshedpur v.Collector of Central Excise, Patna and 1986(24) ELT 345 in the case of Indian Explosives Ltd., Calcutta v. Collector of Central Excise, Patna.
On merits of the case, the learned Consultant has stated that the requirements of Notification were substantially complied with. There was no evidence of misuse of clinical samples. No objection was also raised by the Central Excise authorities on RT-12 Returns filed by the appellants from time to time.
3. The learned J.D.R. has argued that the dictionary meaning of the word "distinctly" as appearing in the Oxford Dictionary is "unmistakably". Although on the clinical samples there was marking to the effect "Physician's sample, not to be sold", the samples were not packed in a form distinctly different from the trade packs. Third condition of the Notification was, therefore, not fulfilled by the appellants and hence, duty was payable.
4. We have carefully considered the case records and the arguments of both sides. The third condition of the Notification No. 48/77-C.E., dated 1-4-1977 reads as follows : "Samples should be packed in a form distinctly different from regular trade packing and each smallest packing is clearly and conspicuously marked "Physician's samples not to be sold." As per this condition, the form of packing of the samples should be distinctly different from the packing of the regular trade packs in addition to the clear and conspicuous marking "Physician's samples, not to be sold." It will not suffice if such marking only is there on the packing of the samples. The intention is that the packing of the samples should be such that on looking at the sample pack it can be easily distinguished from the trade packings and one is not to strain his eyes to read the printed price and quantity on the packing and then find out the minor difference in the printing of the samples. The difference between the two packs should be distinctly clear from the very form of packings. Minor difference in the printing like price or quantity is no doubt some difference, but it does not amount to a "distinctly different form" within' the meaning of the Notification.
5. During the hearing before us, the learned Consultant for the appellants submitted two sets of samples of Cemizol Vet and Vitamin C Drops Sukcee. The samples of Cemizol Vet are in bottles and it was not urged that the bottles are not packing within the meaning of the Notification. Each set consists of one sample pack and one trade pack.
On a minute comparison of the two packings of Cemizol Vet we find no difference between the two except that the Physician's sample pack contains the marking "PHYSICIAN'S SAMPLE, NOT FOR SALE". Similarly, on a minute comparison of the two packs of Vitamin C Drops Sukcee, we find that the sample pack bears the marking "PHYSICIAN'S SAMPLE, NOT FOR SALE". Retail price is printed on the trade pack of Sukcee Drops, but no price is printed on the sample pack of this medicine. Except the above difference, there is no difference in the form of packing of trade pack and sample pack of Cemizol Vet and Sukcee Drops. As the packing of the sample packs is not distinctly different in form from the packing of trade packs in respect of these two medicines, the condition of the Notification is not fulfilled and as a result the benefit of the exemption as per Notification No. 48/77-CE is not admissible in respect of these two medicines.
6. So far as Cebexin is concerned, no sample has been submitted for our inspection. In paragraph 3 of the grounds of appeal, the appellants have stated that the sample pack of this medicine is marked with extra white lines on the top and the bottom in addition to the marking "Physician's sample, not to be sold". It is also stated that the number of tablets is indicated in the trade pack while it is not so in the case of sample pack. These differences were brought to the notice of the Collector as it appears from the impugned order, but he has held that the sample pack is not distinctly different in form from the trade pack. The appellants have not produced any evidence before us to establish that the forms of two packings, trade and sample, are distinctly different from each other in respect of this medicine. In the absence of any such evidence we are unable to hold a view different from that held by the Collector. We are of the view that the marking "Physician's sample, not to be sold" with extra white lines on top and bottom does not make the sample pack distinctly different from the trade pack. In the circumstances, we hold that the benefit of exemption under the Notification No. 48/77-CE is not admissible in respect of this medicine also.
7. The appellants have raised a plea that the Department has not produced any evidence to prove that the sample packs did not find their way in the market. This plea does not help the appellants. The Notification does not stipulate that the exemption is admissible in the absence of any evidence that the sample packs have been sold in the market. We are to go by the terms of the Notification. If the terms of the Notification are fulfilled, the exemption is admissible and not otherwise. In the present case, the samples of three medicines in dispute have not satisfied the conditions of the Notification and hence the exemption is not admissible. The plea of the Trade Notice of 1964 also does not help the case of the appellants as the Trade Notice was issued long before the Notification came into existence and the Trade Notice can not override a statutory Notification.
8. Duty is, therefore, payable by the appellants on the samples of Cemizol Vet, Sukcee Drops and Cebexin, but the demand for duty on the past clearances of these samples should be limited to the statutory period of six months as laid down in Rule 10 of the Central Excise Rules and Section 11-A of the Central Excises and Salt Act, 1944. The longer time limit of 5 years for raising demand for duty cannot be invoked in this case as there was no clandestine removal of the sample packs nor any suppression or wilful mis-statement of facts by the appellants is proved. They filed classification lists claiming the benefit of exemption Notification in respect of the samples and the classification lists were approved. They also filed RT-12 Returns with Gate Passes and no objection was raised thereon. Samples were called for by the Assistant Collector on 30-6-1981, but the show cause notice demanding duty was issued on 10-8-1982, i.e., after more than one year.
The appellants were not expected to furnish more details in the classification lists. They declared the Physician's samples, and claimed the exemption under the Notification No. *8/77-CE. The proper officer could verify the facts by inspection of the samples in time.
Having failed to do so, the appellants cannot be charged for clandestine removal or suppression of facts, or wilful mis-statement, when they filed classification lists and R.T.-12 Returns regularly and the same were approved. They were not expected to give more details-in the above documents as they were under the belief that they satisfied the condition of Notification by marking the sample packs with the words "Physician's samples, not for sale" although such belief was not correct.
9. The learned Consultant for the appellants relied upon two decisions of this Tribunal. In the decision reported in 1986(23) ELT 205 (Tribunal), it was held by this Tribunal that the extended period of 5 years is inapplicable when there was no suppression of facts or clandestine removal and the limitation of six months as laid down in Rule 10 of the Central Excise Rules was applicable. In 1986(24) ELT 345, the facts of the case were that the appellants factory was producing detonators since 1966 and was paying duty thereon under Item 68 of the Central Excise Tariff since 1975 when this item was first introduced. The Tribunal observed that the Central Excise Officer could not have assessed the detonators without seeing the aluminium and copper detonator caps, termed by the excise authorities as aluminium container/copper tube. The Tribunal held that there was no suppression of facts in the facts and circumstances of the case.
10. Based on our findings in the foregoing paragraphs we decide as follows : (i) The samples of three medicines in dispute, viz., Cemizol Vet, Sukcee Drops and Cebexin, are not eligible for the exemption under Notification No. 48/77-C:E., dated l-4-1977 and hence, duty is chargeable; (ii) Demand for duty on past clearances should be limited to a period of six months under Rule 10 of the Central Excise Rules and Section 11-A of the Central Excises & Salt Act, 1944 as there was no clandestine removal of the samples and no suppression or mis-statement of facts is proved against the appellants.