TMI Blog2024 (3) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... , the physician samples manufactured and cleared on job work basis for free distribution also be assessed on the value of retail sale price of similar goods and not under Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, since the same were not cleared for captive consumption as observed by the Tribunal in the case of GOA ANTIBIOTICS PHARMACEUTICALS LTD, GOA VERSUS GOA ANTIBIOTICS PHARMACEUTICALS LTD, GOA VERSUS [ 2013 (12) TMI 390 - CESTAT MUMBAI] - the demand of differential duty with interest confirmed in the impugned orders does not warrant interference. Penalty u/r 25 of the Central Excise Rules, 2002 - HELD THAT:- Since the issue relates to interpretation of valuation rules, there are no merit in imposing penalty on the appellant under Rule 25 of the Central Excise Rules, 2002. The impugned orders are modified to the extent of setting aside the penalty, while upholding the demand of differential duty with interest in all the appeals. Appeals are disposed of. - DR. D.M. MISRA, MEMBER (JUDICIAL) AND MR. PULLELA NAGESWARA RAO, MEMBER (TECHNICAL) Mr. M.P. Baxi, Advocate for the Appellant Mr. H. Jayathirtha, Superintendent (AR) For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angalore Vs. Banner Pharmacaps (India) Ltd. [2017(347) ELT 686 (Tri. Bang.)]. 4. Per contra, the learned AR for the Revenue has submitted that for the clearance of physician samples, the value cannot be determined under Section 4(1)(a) and it should be under Section 4(1)(b) of the Central Excise Act read with Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 inasmuch as these physician samples are not different from the medicaments in the trade packs in quality / characteristics / inputs used in the manufacture of medicines. Further he has submitted that in view of the Board s Circular dated 25.04.2005, the valuation of physician s samples was required to be carried out in terms of Rule 4 read with Rule 11 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Further he has submitted that vide Notification No.2/2005-CE(NT) dated 07.01.2005, the P P medicaments falling under Chapter sub-heading 3003.10 has been notified under Section 4A of the Central Excise Act, 1944 to be assessed on MRP basis. In support, he referred to the judgment of the Larger Bench of CESTAT in the case of Blue Cross Laboratories [2006(202) ELT 182 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Commissioner of Central Excise, Calicut v. Trinity Pharmaceuticals Pvt. Ltd., reported as 2005 (188) E.L.T. 48, which has been accepted by the department. Therefore, we hold that physician samples have to be valued on pro-rata basis for the relevant period. 8. This principle has been followed by this Tribunal in Amazon Drugs Pvt. Ltd. and it is observed as follows: 14. Thus, the contention of the appellant before the Supreme Court that the free physician samples have to be assessed on the cost of manufacture plus 15% profit as contemplated under rule 8 of the 2000 Rules was not accepted by the Supreme Court. 15. In the present appeal, the appellant has also determined the valuation under rule 8 of the 2000 Rules by adding 15% profit to the cost of manufacture. Such a determination of the assessable value has not been accepted by the Supreme Court. The Commissioner (Appeals), therefore, committed no illegality. 9. We also find that the Larger Bench of the Tribunal in the case of Cadila Pharmaceuticals Ltd. (supra) has held as under:- 22 . Medicaments came to be notified as specified goods under Section 4A of the Act in January, 2005. Thus, when sold in packages or bottl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to by Member (Judicial) in her opinion; however, for the sake of convenience, they may be quoted again a under: Rule 4 . The value of the excisable goods shall be based on the value of such goods sold by the assessee for delivery at any other time nearest to the time of the removal of goods under assessment, subject, if necessary, to such adjustment on account of the difference in the dates of delivery of such goods and of the excisable goods under assessment, as may appear reasonable. Rule 8 . Where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be (one hundred and ten per cent) of the cost of production or manufacture of such goods. 24 . The same question as to whether the assessable value of the physician s samples is to be determined as per the provisions of Rule 4 or Rule 8 came up for consideration in the Bombay High Court in the case of Indian Drugs Manufacturer s Association v. Union of India - 2008 (222) E.L.T. 22 (Bom.). After elaborate discussion, the High Court came to the conclusion that rule 4 squarely applies to clearances of physician s free sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods which are subject matter of assessment, that is to say, physician s sample in the instant case. It cannot be contended that physician s samples are different from the goods (medicines) sold notwithstanding that they may be sold in lesser quantities or in a different pack having different label, colour, etc. As held by the Bombay High Court, physician s samples are physically, chemically and functionally the same goods (medicines) which are sold in the market. I am in complete respectful agreement with their Lordships of the Bombay High Court that Rule 4 is the general rule and unless found to be inapplicable, would govern valuation of physician s samples. It is to be kept in mind that even if certain ingredients of Rule 4 are found lacking, it would make no difference, for, by virtue of Rule 11 of the Valuation Rules, it is the principle underlying the rule which needs to be applied consistent with other statutory provisions. The situation contemplated in Rule 8 on the other hand is completely different and alien. Rule 8 applies to cases where goods are cleared for use and consumption in the production or manufacture of other articles i.e. for captive consumption. Physician s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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