D.C. Mandal, Member (T)

1. The facts of the case, in brief, are that on 10-8-1982 the Superintendent of Central Excise, Hyderabad issued a show cause notice to the appellants asking them to show cause why Central Excise duty of Rs. 1,54,006.18 should not be paid by them under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A(1) of the Central Excises and Salt Act, 1944 and why penalty should not be imposed on them under Rules 9(2) and 173-Q of the Central Excise Rules, 1944. The charge against the appellants was that they cleared clinical samples of P or P-Medicines falling under Item 14-E of the Central Excise Tariff without observing the conditions prescribed in Notification No. 48/77-C.E., dated 1-4-1977. According to condition No. 3 of the said Notification, the clinical samples should be packed in a form distinctly different from regular trade packing and each smallest packing should be clearly and conspicuously marked "Physician's sample, not to be sold". It was alleged that the appellants did not satisfy this condition of the Notification and hence, they were -not entitled to clear the samples without payment of Central Excise Duty. The period covered by the Show Cause Notice related to September, 1977 to June, 1982. On adjudication of the case after observing the required procedure, the Collector held that in case of Cebexin, Sukcee Drops and Cemizol (Vet) the clinical samples did not qualify for exemption. In respect of these three medicines, the difference indicated between packing of clinical samples and trade; packing was as follows :

(i) CEBEXIN: Sample packs and commercial packs are put in identical glass bottles and in identical cartons. However, in the clinical sample there is a marking "Physician's sample, not to be sold", with extra white lines on the top and bottom. Sample packs do not indicate the number of tablets it contains, while in the case of trade pack, there is an indication that it contains 50 tablets.

(ii) SUKCEE DROPS: The sample pack bears the marking "Physician's sample, not to be sold". The trade pack contains an indication of the retail price, whereas no such price is marked on the sample pack. There is no other difference between the two forms of packings.

(iii) CEMIZOL (VET): Sample pack contains marking "Physician's sample, not to be sold". There is no other difference between two kinds of packing.

The Collector has held that a small difference in the information contained on the packings as between trade packings and clinical samples should not satisfy the condition that samples should be packed in a form distinctly different from regular trade packing. After inspecting samples of trade packings and clinical samples in respect of these three medicines, he has observed that it would be difficult to distinguish the trade packs from the clinical samples and hence clinical samples were not entitled to the exemption under Notification as the clinical samples were not packed in a form distinctly different from regular trade packing. Accordingly, he has held that duty was payable on the clinical samples cleared by the appellants in respect of these three medicines. He has also held that information furnished in the classification lists claiming exemption under Notification No. 48/77-CE did not reflect details necessary for determining whether the conditions of that Notification were satisfied in respect of the sample packs of the medicines in question and in the absence of such information, approval of the classification lists should not have been denied and the same had been approved in the absence of the relevant details, which the party should have furnished. According to the Collector, there was suppression of information and therefore, demand for duty could be raised for the period of five years.

2. During the hearing before us, the learned Consultant for the appellants has argued on the legal ground of limitation as well as on the merits of the case. Arguing on the question