Full Judgment
While claim ing exemption from duty for PP medicines under Notification No. 80/80, dated 19.6.1980, the appellants filed declaration in terms of Notification No. 2/81 for exemption from licenc ing control inasmuch as they declared that the clearances of their medicine during the preceding financial year did not exceed Rs. 6,00,000/-. In declaring this clearance value of medicines, it is admitted that the appellants herein did not include the value of phar macopeal medicines which were fully exempted under Notification No. 55/75, dated 1.3.1975 under Tariff Item 68. The department has alleged and found in the impugned order that the appellants herein deliberately suppressed the clearance value of phar macopeal medicines and did not include the value thereof in the clearance value of the PP medicines. This deliberate suppression of facts, according to the Department, has led to the evasion of duty.
Accordingly the adjudicating authority in the impugned order has imposed a penalty of Rs. 10,000/- on the appellants herein for removing the goods without payment of appropriate duty and duty due on medicines worth Rs. 5,57,088.92 paise has also been demanded. The period concerned for the demand of duty is the financial years 1981 -82 and 1982-83. Show cause notice leading to the impugned order demanding duty and proposing imposition of penalty was issued on 9.9.1983.
2. The learned advocate Shri V. Lakshmikumaran appearing for the appellants has conceded in the beginning that the Notification No.80/80 dated 19.6.1980 is not avail able to the appellants inasmuch as the value of clearance of the pharmacopeal medicines ought to have been included, but was not included by the appellants on a certain misunderstanding. He, however, states that there is no deliberate suppression of facts or contravention of any Rule with intent to evade payment of duty calling for invoking the larger time limit of 5 years for demand of duty. For that very reason there is no case for imposition of penalty as well. He urges that pharmacopeal medicines were admittedly fully exempted under Notification No. 55/75 and, therefore, in view of the uncertain legal posi tion at that time it was doubtful whether such pharmacopeal medicines were at all ex cisable goods or not. If they are not treated as excisable goods, there was no case for inclusion of these goods in the declaration which the appellants made for seeking exemption from the licencing control under Notification No. 2/81. He states that this position be came clear only after publication of the judgment of Delhi High Court in the case of Vlshal Andhra Industries v. Union of India [1983 ELT 2265 (DELHI)]. On the other hand the learned JDR appearing for the Department points out that this plea has no force. Firstly for the reason that such a plea was not taken by the appellants herein before the adjudicat ing authority. The plea taken before the adjudicating authority was that pharmacopeal medicines were treated by them as PP medicines falling under Tariff Item 14E and since they were exempted, they were not included for the purpose of declaration under Notifica tion No. 2/81.
Secondly the learned JDR points out that the declaration form (under Item 4 thereof) under Notification 2/81 (available at page 20 of the paper book filed by the Department) envisages "full description of the goods (itemwise) manufactured by the fac tory". There Is no provision for making declaration of only excisable goods as such. There fore, he urges that the plea of the appellants' learned advocate is not merely an afterthought but also without any substance in the face of clear terminology of the decla ration.
3. We have carefully considered the pleas advanced on the aforesaid points from both sides. We agree with the learned JDR that in view of the wording of the declaration required to be made by the appellants in the form under Notification No. 2/81 there was no scope for any ambiguity for making declaration of pharmacopeal medicines as well. The appellants plea that pharmacopeal medicines were treated in some quarter as PP medicines under Item 14-E, this on the face of it without any substance. Reading of Ex planation I to Item 14-E makes it very clear that patent or proprietary medicines are, inter alia medicines which are not mentioned in a pharmacopoeia. Hence there could be no scope for confusion at all as this has been made out by the appellants before the lower authority or by the learned advocate during the course of hearing. We agree with the learned JDR that the present plea of the learned advocate is an afterthought.
4. The learned advocate further urges that in any case there is no positive evidence of deliberate suppression of facts with a view to evade payment of duty. For this proposition the learned advocate relies upon the decisions of this Tribunal in the follow ing cases:National Dyeing Centre and Ors. v. Collector of Central Excise, New DelhiKaytu Chemicals Ltd. v. Collector of Central Excise, Bombay -I (minority decision) [1988 (35) ELT 641 (Tribunal)].
3. Poona Bottling Company Ltd. v. Union of India [1988 (35) ELT 627, Bombay].
5. He also takes support on the fact that the Department was in knowledge of the appellants manufacturing pharmacopeal products inasmuch as lables of pharmacopeal medicines were approved by the Department. He drew the attention of the Bench to the Superintendent's letter dated 4.11.1981 addressed to the appellants conveying approval to the tables of some of the medicines. Learned JDR on the other hand points out that the facts in the cases relied upon by the advocate for the appellants are totally different from the facts avalable in this case. In the instant case the declaration was filed by the appel lants without in any way indicating that they were manufacturing pharmacopeal medicines and that they had not included the value of these medicines despite the very clear word ing of the declaration. The approval of certain tables does not prove anything so far as the declaration of the value is concerned. Even if it is assumed that the Department had the knowledge regarding the manufacture of pharmacopeal medicines by the appellant the department could in no way have any knowledge that the clearance value of these medicines have been inducted or not in the declaration. It was for the appellant to make the position clear and in case they had any doubt they could have sought some clarifica tion from the Department We have carefully considered this plea as well of the learned advocate and the counter plea made by the learned JDR. We are inclined to agree with the latter. We do not agree with the learned advocate for the appellant that there must be some positive evidence on record of wilful suppression of facts with a view to evade pay ment of duty before the larger time limit is invoked by the Department.
'Wilfutness' and 'intent' are expressions of mental state of, at the time of doing, or omitting to do an act by a person. Only that person concerned knows about the wilful or intentional act of his. In such situations it is futile to look for a positive evidence of wilfulness or intent of an action or non-action. Accordingly averment of wilful misstatement, suppression of fact or con travention of any Rule with an intent to evade payment of duty has to be made from the overall facts and circumstances available in each case. No hard and fast Rule can be laid down for making this averment. In the instant case we observe that the appellants have not made the correct declaration of production of goods as per the declaration under Notification No. 2/81. Had they followed the proforma strictly there would have been no cause for confusion. Their plea that pharmacopeal products were exempted or they fall under Tariff item 14-E have already been dealt with above. It has to be inferred fairly on the facts and circumstances available in this case that the appellants have not declared their production of medicines (PP orpharmacopeal) in full manner as they were required to do. This act of theirs has, therefore, to be taken as a deliberate act of suppression of facts with a view to evade payment of appropriate duty. The provisions of Rule 9 for removal of excisable goods without payment of full duty thereon are duly attracted in the facts and circumstances of this case as held by the lower authority. The decisions relied upon by the learned advocate for the appellant have been found on different facts and are not applicable to the facts and circumstances of this case. In the case of National Dyeing Centre mentioned supra there was no mis-declaration made by the assessees therein as has been done by the appellants herein. Bombay High Court's decision supra in Poona Bottling Co. Ltd. lays down the principles before applying the provision of proviso to Sec tion 11 -A of the Central Excises and Salt Act, 1944 without giving the facts of the case. We respectfully agree with these principles and we have applied these principles in this case. Hence we find no merit in the pleas of the learned advocate. Therefore, we reject the appeal without any interference in the impugned order.