2008 (8) TMI 299

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.... Excise & Customs, Belapur by which he confirmed the central excise duty amounting to Rs. 5,61,58,199/- and education cess of Rs. 98,897/- under Section 11A(2) of the Central Excise Act, 1944 and imposed equivalent penalty of Rs. 5,62,57,096/- under Section 11AC ibid and demanded interest under Section 11AB ibid. 2. Heard both the sides and perused the records. 3. The appellants are engaged, inter alia, in the manufacture of patent and proprietary medicaments falling under Chapter 30 of the Central Excise Act, 1985. 4. During the period relevant to the present proceedings i.e. 1-7-2000 to 7-1-2005, the appellants were manufacturing and selling certain medicines to one M/s. USV Limited, Mumbai and one M/s. Lifeon Paediatrics Ltd. (n....

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....pellants under Section 11AC ibid of the Act and Rule 173Q of the Central Excise Rules, 1944 and/or Rule 25 of the Central Excise Rules, 2002. 6. After following the necessary adjudication proceedings, the Commissioner passed the impugned order as referred to above. Hence this appeal. 7. We find that the basic case of the Revenue is that the appellants' buyers have incurred expenses on account of several heads "such as storage, outward handling, distribution, marketing and other expenses." However, the specific heads of expenditure have not been particularized in the Show Cause Notice. It was incumbent upon the Revenue to specify the expenditure incurred by the appellants under each specific head, pointing out the amount of differentia....

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....d that the entire difference between the Maximum Retail Price (MRP in short) at which the goods were sold and the selling price of the appellants represented only the expenditure incurred by the buyers on account of the varioas selling and distribution expenses on behalf of the appellants. It is common knowledge that the MRP comprehends several downstream sale elements such as wholesalers' margins, retailers' margins, the margins of the said purchasers, as also the elements of local taxes, freight etc, all of which will form part of the MRP. Therefore, it is not correct to assume that the entire difference between the appellants' sale price to their buyers and the MRP represented only the expenditure incurred by the said buyers. 10. The ....