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M/s KLAR Sehen Pvt Ltd. Versus CC, CE & ST, Hyderabad-IV

2017 (11) TMI 9 - CESTAT HYDERABAD

Valuation - physician samples cleared for free distribution - physician samples cleared on sale on principal to principle basis - Held that: - In respect of physician samples cleared for free distribution inter alia res integra it has been conclusively decided that valuation of physician samples manufactured for free distribution are required to be made on the basis of pro-rata value of regular pack of comparable goods in terms of provisions of Rule 4 of Central Excise Valuation Rules, 1988 - Th .....

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ttled by the Tribunal decisions in Sidmak Laboratories India Ltd., reported in [2008 (9) TMI 360 - CESTAT, AHMEDABAD] where it was held that in such cases that valuation under Section 4 of CEA 1944 was justified - appeal allowed. - Penalty - Held that: - there were clearly two views on the manner and method of valuation of physician samples supplied for free distribution - penalty set aside. - Appeal allowed in part. - E/660/2012 - A/31574/2017 - Dated:- 7-9-2017 - Mr. M. V. Ravindran .....

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ician samples cleared for free distribution and (b) cleared on sale on principal to principle basis. Duty was demanded for the extended period along with interest and penalty equal to duty was imposed. The period involved is 2005-06 to 2007-08 (up to Dec 2007). 2. Department relies on CBEC Circular No.813/10/2005-CX dated 25.04.2005 according to which valuation of free samples are to be determined under Rule 4 of the Valuation Rules, 2000. Appellants cleared physician samples for free distributi .....

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d also imposed equal penalty under Rule 25 of CER read with Section 11AC of the act. In appeal, Commissioner (Appeals) vide the impugned order dated 22.12.2011 uphold the order of original authority. Hence, aggrieved appellants have filed this appeal. 3. On 07.09.2017, when the matter came up for hearing, on behalf of appellant Ld. Advocate Sh. Y. Sreenivasa Reddy made oral and written submissions which can be summarised as follows: (i) The duty liability in dispute in respect of the first issue .....

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o rata basis of the corresponding P or P medicines. In the case of physician samples manufactured and sold on principal to principal basis, it is settles legal position now that the transaction value is the assessable value and not pro rata basis. Cited below are few decisions: (a) CCE Vs Sidmak Laboratories India Ltd., [2009 (242) ELT 255 (Tri-Ahmd)] (b) CCE Vs Sidmak Laboratories India Ltd., [2011 (270) ELT A90 (SC)] affirming the above decision) (c) Gelnova Laboratories Pvt Ltd., Vs CCE [2014 .....

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s and not on cost construction method, the demand is barred by limitation, since the appellant had paid excise duty on these samples on cost construction method basing on the legal position prevailing during the relevant period. Further notice was issued simple basing on ER1s filed verified during audit, the appellant has declared the values of P or P medicines and their corresponding values. Therefore, suppression cannot be invoked. In identical case of Marsha Pvt ltd., Vs CCE, Vadodara [2009 ( .....

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he facts of the matter. 5.2 In respect of physician samples cleared for free distribution inter alia res integra it has been conclusively decided that valuation of physician samples manufactured for free distribution are required to be made on the basis of pro-rata value of regular pack of comparable goods in terms of provisions of Rule 4 of Central Excise Valuation Rules, 1988. The very issue was addressed by the Larger Bench in the case of Cadila Pharmaceuticals Ltd., [2008 (232) ELT 245 (Tri- .....

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, [2016-TIOL-2252-CESTAT-HYD]. This being so, the adoption of appellant on a notional value for payment of duty on the physician samples for free distribution is not on order. In consequence of that part of the order confirming duty liability of physician samples supplied free that part of the impugned order confirm tax liability in respect of such physician samples distributed free of cost will require to be sustained which we hereby do. Appeal of the appellant in respect of this issue will the .....

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A 1944 was justified. The department's appeal against decision was dismissed by the Hon ble Apex Court as reported in [2011 (270) ELT A90 (SC)]. The ratio of laid down in the Sidmak Laboratories case has been followed in a number of other decisions by the Tribunal some of which have been cited by the Ld. Advocate in para 3 above. In these circumstances, that para of the impugned order confirming differential duty on physician samples sold and assessed had transaction value will not sustain a .....

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