TaxTMI 
TaxTMI 
2017 (2) TMI 883
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.... against M/s Sarvodaya Laboratory for under-valuation and clandestine clearance of certain medicaments supplied to hospitals under rate contract. Penalties were imposed on M/s Pharmaica, M/s Money Pharma and M/s Vipul Drugs Pvt. Ltd. under Rule 173Q(1) of Central Excise Rules, 1944 and Rule 25 of the Central Excise Rules, 2002. Penalties were imposed on Shri Bharat D Shahm partner of M/s Pharmaica and Shri Vipul N Mehta, Director of M/s Vipul Drugs under Rule 209 of Central Excise Rules, 1944 and Rule 26 of Central Excise Rules, 2002. Aggrieved by the said orders, the appellants are before Tribunal. 2. Shri V.S. Sejpal, learned Counsel for M/s Pharmaica argued that M/s Pharmaica is not a purchaser, manufacturer, registered person of HUF ....
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....nsel argued that they were only a consignment agent and were distributing the goods in the State of Kerala on behalf of M/s Sarvodaya Laboratory. They were not aware of the illegal activity of M/s Sarvodaya Laboratory. He argued that the Order-in-Original imposed penalty on tem under Rule 173Q of Central Excise Rules, 1944 and Rule 25 of the Central Excise Rules, 2002 by observing that they wee concerned in transporting, keeping and selling or purchasing or in any other manner dealing with the excisable goods. These offences can only result in invocation of Rule 26 and not of Rule 25. He argued that they are not registered dealer and, therefore, no penalty under Rule 25 can be imposed on them. 2.3 Ms. Nehal Parekh, learned Advocate appea....
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....cisable goods in contravention of any of the provisions of these rules or the notification issued under these rules; or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, as the case may be, shall be liable to a pena....
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....fore, Director of MIs Sarvodaya Laboratory offered us distributorship of M/s Sarvodaya Laboratory for supplying tablets, capsules, suspensions and syrups to Govt., Semi Govt., medical colleges and hospitals and that as such we can get payments directly from the Govt. Institutions, which can be adjusted towards our outstanding amount against M/s Sarvodaya Laboratory. Goods were dispatched directly from the factory of M/s Sarvodaya Laboratory under our Delivery Challans and payment was made to us directly by the parties to whom goods were despatched. In view of the above, it is alleged that we were distributors of M/s Sarvodaya Laboratory who dealt in goods cleared clandestinely by M/s Sarvodaya. It is further alleg....
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.... commercial transaction but a transaction entered into for recovery of dues from M/s Sarvodaya Laboratory and the sale was actually taking place directly by M/s Sarvodaya Laboratory to various hospitals. 4.1 M/s Vipul Drugs has also stated in their appeal memorandum that they did not insist on receipt of excise invoice as they could not have taken credit of the same. In the above stated facts, the knowledge of under-valuation by the appellant is clearly established. M/s Pharmaica has argued that they were receiving the excise invoices and they could not be held liable if such invoices were fake. M/s Vipul Drugs has, however, stated that they were not receiving any invoice. 4.2 The second issue which arises whether penalty can be impos....