9911796707
TMI Blog2024 (6) TMI 1004X X X X Extracts X X X X X X X X Extracts X X X X ..... of production. Alleging that the method of assessment is incorrect as the value needs to be determined under Rule 4 of Central Excise Valuation Rules, 2000, show-cause notice was issued to them invoking extended period of limitation for recovery of the differential duty amounting to Rs.44,94,650/- with interest and penalty. On adjudication, the demand was confirmed with interest and penalty. On appeal, the learned Commissioner(Appeals) upheld the Order-in-Original. Hence, the present appeal. 3. The learned advocate for the appellant has submitted that the appellants manufacture pharmaceutical products on a principal to principal agreement with 3rd parties. Under such agreement, the appellant also manufacture physician samples and supplies the same to purchasers. The learned advocate submitted that the issue to be decided is the method of determination of value of goods manufactured and cleared by the appellants in terms of transaction on principal to principal basis and the issue of involving extended period and imposition of penalty. She has submitted that the issue is no more res integra and covered by various judgements of the Tribunal and Hon'ble Supreme Court. She relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e short issue involved for consideration is whether the physician samples cleared by the appellant to the principal manufacturer or manufactured and cleared on job work basis to be assessed under Rule 4 read with Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or Rule 8 of the said Rules; whether penalty is imposable under Rule 25 of the Central Excise Rules. 7. We find that the Hon'ble Supreme Court in Medley Pharmaceuticals' case (supra) has laid down the principle as follows : "41. Now coming to the valuation of the physician samples for the purpose of levy of excise duty, in our view, this issue need not detain us long in view of the decision of this Court in the case of Commissioner of Central Excise v. M/s. Bal Pharma [Civil Appeal No. 1697 of 2006] [2010 (259) E.L.T. 10 (S.C.)]. This Court has upheld the conclusion of the Tribunal that the physician's samples have to be valued on pro-rata basis. The Tribunal, while arriving at the aforesaid conclusion, had relied upon its earlier decision in the case of Commissioner of Central Excise, Calicut v. Trinity Pharmaceuticals Pvt. Ltd., reported as 2005 (188) E.L.T. 48, which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any excisable goods cannot be determined under the preceding Rules i.e rules 4 to 11 which are the substantive rules laying down the manner or formula for determination of value, that is, if none of the substantive rule is per se applicable, the value is to be determined as per the principles and general provisions of the Rules as well as Section 4(1) of the Act. In other words, when no particular rule or rules can be strictly applied per se, the value shall be determined using reasonable parameters consistent with the express provisions of the Rules and sub-section (1) of Section 4 of the Act. However, the rule itself does not contain any formula and, therefore, cannot be applied independently de hors the provisions of Rules 4 to 10 and Section 4(1) of the Act. 23. Both sides, again, very fairly agreed that the provisions of Rules 5, 6, 7, 9 & 10 are not applicable and, therefore, the answer has to be found in either Rule 4 or Rule 8. According to the parties, Rules 4 and 8 are the competing rules applicability whereof is to be decided. These Rules have been referred to by Member (Judicial) in her opinion; however, for the sake of convenience, they may be quoted again a under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 975. (I shall refer to the relevant rules a little later.) The concept of valuation underwent a drastic change with the amendment of clause (a) of Section 4(1) with effect from 1-7-2000. The concept of deemed value was done away with and substituted by the concept of the transaction value as the basis of valuation. With the introduction of the concept of valuation based on transaction value, the Central Government framed new rules in 2000, namely, Central Excise Valuation (Determination of Price of the Excisable Goods) Rules, 2000 with which we are concerned in this case. 26. .... ... 27. .... ... 28. ... ... 29. In order to attract Rule 4 there need not be another sale. The rule has been quoted above but in order to bring home the point, the relevant part of it may be quoted again as under : "The value of the excisable goods" (read physician's sample) "shall be based on the value of such goods sold by the assessee.....". It would thus appear that there need be another sale of the goods, that is, medicines in the present case. The expression 'such goods' must necessarily be understood as referring to the goods which are subject matter of assessment, that is to say, phy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of physician's samples would continue to be Rule 4 and the decision of the Larger Bench in Blue Cross Laboratories Ltd.'s case (supra) mutatis mutandis continues to be good law. The reference is accordingly answered in the affirmative in favour of the Revenue and against the appellant/assessee. 10. Consequently, following the aforesaid judgments, we find that the physician samples cleared to their principal manufacturer are assessable under Rule 4 read with Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Also, 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 (supra). Consequently, the demand of differential duty with interest confirmed in the impugned orders does not warrant interference. However, since the issue relates to interpretation of valuation rules, we do not find merit in impo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
