2012 (9) TMI 640 - AT - Central Excise

Tribunal grants stay, directs interest payment on duty, sets aside penalty under Central Excise Act.

M/s. Dupen Laboratories Pvt. Ltd. Versus CCE Vapi

M/s. Dupen Laboratories Pvt. Ltd. Versus CCE Vapi - TMI Issues involved:1. Stay petition for waiver of pre-deposit of penalty.2. Valuation of physician samples for duty liability.3. Liability to pay interest on duty amount.4. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.Issue 1: Stay petition for waiver of pre-deposit of penaltyThe stay petition was filed by the appellant seeking a waiver of pre-deposit of the penalty involved in the case, as they had already discharged the central excise duty liability and interest. The Tribunal found that the appeal itself could be disposed of at that juncture. After allowing the stay petition, the Tribunal proceeded to take up the appeal for disposal.Issue 2: Valuation of physician samples for duty liabilityThe main issue in this case revolved around the valuation of physician samples cleared by the appellant between April 2005 to September 2006. The appellant had valued the samples based on Rule 8 of the Central Excise Rules and Section 4 of the Central Excise Act, 1944. However, the Revenue contended that the samples should have been valued based on the prorata value of the sales pack manufactured and cleared. The Tribunal referred to a Larger Bench decision in the case of Cadila Laboratories Ltd. and held that the appellant was liable to pay the differential duty based on the prorate value. The appellant had already paid the duty liability, and the Tribunal directed them to pay interest on the remaining amount within 30 days.Issue 3: Liability to pay interest on duty amountThe Tribunal determined that the appellant was liable to pay interest on the duty amount they had paid. While the appellant had paid interest on amounts paid before the issuance of the show cause notice, they had not paid interest on a specific amount. The Tribunal directed the appellant to pay interest on this outstanding amount within 30 days and provide evidence to the lower authorities.Issue 4: Imposition of penalty under Section 11ACRegarding the imposition of penalty under Section 11AC of the Central Excise Act, 1944, the Tribunal considered the issue of valuation of physician samples. It was noted that there was a dispute between the department and the trade, which had to be decided by a Larger Bench. Given the interpretation issue involved, the Tribunal found that the penalty imposed on the appellant seemed unwarranted. Consequently, the Tribunal set aside the penalty imposed by the lower authorities.In conclusion, the Tribunal set aside the penalty imposed under Section 11AC of the Central Excise Act, 1944 and disposed of the appeal accordingly.