M/S. P & B PHARMACEUTICALS (P) LTD. versus COLLECTOR OF CENTRAL EXCISE

Citation: [2003] 2 S.C.R. 252 · Decided: 19-02-2003 · Supreme Court of India · Bench: S.S.M. QUADRI, ASHOK BHAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
MIS. P & B PHARMACEUTICALS (P) LTD. 
v. 
COLLECTOR OF CENTRAL EXCISE 
FEBRUARY 19, 2003 
B 
[SYED SHAH MOHAMMED QUADRI AND ASHOK BHAN, JJ.] 
I 
....! 
Central Excise Act, I 944: 
·, 
S. I I-A, proviso-Recovery of duty not levied due to suppression of fact 
\ 
J' 
c regarding related person-Assessee, manufacturing patent and proprietary 
_,. 
medicines-Show cause notices issued to assessee demanding duty on the basis 
of price at which its distributor sold goods in whole sale trade on the ground that 
said distributor was a related person and the assessee suppressed the fact-Held, 
the issue that distributor was a related person has been the subject matter of 
D 
consideration of excise authorities at different stages and necessary material was 
before the authorities-They had then taken the view that distriblllor was not a 
related person-If the authorities came to the conclusion subsequently that it was 
a related person, the same fact could not be treated as a suppression of fact on 
the part of assessee so as to saddle it with liability of duty for the larger period 
" 
by invoking proviso to s. I I-A-As regards the assessee, it has all along been 
E contending that they were not related persons, so, it cannot be said to be guilty 
of not filing up the declaration indicating. related persons-The demand for 
extended period by invoking proviso to s. I I-A cannot be upheld 
" 
S. I I-A, proviso-Exemption Notification No.17 5186-CE dated I. 3. I 986-
Para 7-Recovery of duty not levied due to suppression of fact that logo used 
F by assessee was also being used by another manufacturer-Assessee, a small 
scale unit manufacturing patent and proprietary medicines-Using logo "Pl 
B" assigned to it by "P & B Laboratories Ltd. "-Show cause notice issued 
to assessee stating that assessee suppressed the fact that the logo used by it 
was also being used by another manufacturer, which was ineligible for 
G 
exemption under Notification No. J 75186-CE-Held, use of logo of the 
manufacturer by other person whether an assignor or a third party, has no 
relevance for purposes of para 7 of exemption Notification No. l 75186-C~ 
The ground that assessee has suppressed the fact that Mis. P & B Laboratories 
r-
were also using the logo for availing the benefit under the Notification cannot 
be a valid reason to invoke the proviso to s. I I-A-There is no obligation on 
.H the owner of a logo to make a roving inquiry to ascertain whether any other 
252 
-~ 
MIS. P & B PHARMACEUTICALS (P) LTD. v. C.C.E. 
253 
person is also using his logo and disclose it to the authorities to avert a A 
possible allegation of suppression of fact for purposes of invoking the proviso--
Proviso to s. ll-A is not available to Revenue. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3969 of I 995. 
From the Judgment and Order dated 17.10.94 of the Central Excise B 
Customs and Gold (Control) Appellate Tribunal, New Delhi in A.No. 03192-
A in F.O.No. 290 of 1994-A. 
A.R. Madhav Rao, P.M. Dave, Alok Yadav, Vishwanath Shukla and V. 
Balachandran for the Appellant. 
c 
Jaideep Gupta, Ms. Rekha Pandey and B.K. Prasad for the Respondent. 
The following Order of the Court was delivered : 
This appeal, by the assessee, is from the final order No. 290194-A of 
the Customs, Excise & Gold (Control) Appellate Tribunal in Appeal No.El D 
03192-A, dated October 17, 1994. 
The short point that arises for consideration is: whether the Tribunal 
erred. in upholding the order of the Excise authorities in invoking the proviso 
to Section 11-A of the Central Excise Act, 1944; if so, whether the order E 
confirming penalty is sustainable. 
It will be necessary to refer to the facts giving rise to this appeal. 
The appellant-assessee is a registered small scale unit. It manufactures 
patent and proprietary medicines. It uses a logo "P/B". The assessee claims F 
that the logo was assigned to it by Mis. P&B Laboratories Ltd. by a deed of 
a5signment dated July 1, 1984. The dispute relates to the period from May 
1, 1985 to December 31, 1989. On March 25, 1985 a show cause notice was 
issued to the assessee proposing to demand duty on the basis of the price at 
which its distributor, Mis. Pharmachem Distributors, sold the goods in the 
course of whole-sale trade on the ground that the said distributor was a G 
related person. The assessee submitted its reply. The Assistant Collector of 
Customs & Central Excise, Nadiad dropped the proceedings by order dated 
May 10, 1985. 
It is

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