P.C. Jain, Member (T)

1. Brief facts of the case are that the appellants manufacture patent and proprietary (PP) medicines falling under Central Excise Tariff Item 14-E as also pharmacopoeial medicines falling under Tariff Item 68. While claiming 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 licencing 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 pharmacopoeial 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 pharmacopoeial 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 pharmacopoeial 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 pharmacopoeial medicines were admittedly fully exempted under Notification No. 55/75 and, therefore, in view of the uncertain legal position at that time it was doubtful whether such pharmacopoeial medicines were at all excisable 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 Vishal 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 adjudicating authority. The plea taken before the adjudicating authority was that pharmacopoeial 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 Notification 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 factory ". 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 declaration.

3. We have carefully considered the pleas advanced on the aforesaid points from both sid