MRP-based excise valuation and extended limitation upheld where institutional-supply exclusion was not clearly shown.

MRP-marked medicines cleared through distributors, and not shown as clearly excluded for institutional or industrial supply by a "not for retail sale" endorsement, were treated as assessable under Section 4A of the Central Excise Act. The absence of full disclosure in returns as to which clearances were under Section 4 and which under Section 4A justified invocation of the extended limitation period, so the duty demand and interest were sustained against the company. A penalty on the company was also upheld with the confirmed duty demand. By contrast, penalty on the manager under Rule 26 was set aside because no specific role, personal benefit, or independent culpability was recorded.

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Issues: (i) Whether the appellant's clearances of MRP-marked medicines supplied through distributors and to institutional buyers were assessable under Section 4A of the Central Excise Act, 1944, and whether the extended period of limitation was invokable; (ii) whether the penalty imposed on the company and the penalty imposed on its manager under Rule 26 of the Central Excise Rules, 2002 were sustainable.

Issue (i): Whether the appellant's clearances of MRP-marked medicines supplied through distributors and to institutional buyers were assessable under Section 4A of the Central Excise Act, 1944, and whether the extended period of limitation was invokable?

Analysis: The medicines bore MRP and were cleared not only directly to institutions but also through distributors. The governing metrology framework exempts only packaged commodities meant for industrial or institutional consumers where the goods are directly supplied for such use or are clearly marked as not for retail sale. The record showed no endorsement of "not for retail sale" on the packages cleared by the appellant, and the mere use of "Government invoice" on excise invoices did not satisfy the requirements of the metrology rules. The returns filed with the department did not disclose the clearances in a manner showing which goods were assessed under Section 4 and which, if any, under Section 4A. The non-disclosure of this material fact justified invocation of the extended period.

Conclusion: The demand under Section 4A, the confirmation of differential duty and interest, and the invocation of the extended period were upheld against the company.

Issue (ii): Whether the penalty imposed on the company and the penalty imposed on its manager under Rule 26 of the Central Excise Rules, 2002 were sustainable?

Analysis: The equal penalty on the company followed the confirmed duty demand and was sustained. However, the order imposing penalty on the manager did not record any specific role, personal benefit, or independent culpability. An employee acting in the course of employment, without evidence of personal interest in the alleged evasion, could not be visited with penalty merely on that basis.

Conclusion: The penalty on the company was sustained, but the penalty on the manager was set aside.

Final Conclusion: The company's challenge failed on merits and limitation, while the individual penalty against the manager was annulled, resulting in partial relief only.

Ratio Decidendi: MRP-based assessment under Section 4A applies where the goods are not shown to be excluded as institutional or industrial supplies by direct sale or by a clear "not for retail sale" endorsement, and suppression of material clearance details in returns can justify the extended period of limitation; employee penalty requires evidence of specific culpable involvement.

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