Custom, Excise & Service Tax Tribunal
Elvina Pharmaceuticals Ltd vs Belgaum on 13 February, 2025
Central Excise Appeal No. E/3550/2012
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 2
Central Excise Appeal No. 3550 of 2012
[Arising out of Order-in-Appeal No. 452/2012 dated 14.09.2012 passed by
the Commissioner of Central Excise (Appeals), Mangalore]
Elvina Pharmaceuticals Ltd.
P.B. Road, Kotur
Dharwad ............ Appellant
VERSUS
Commissioner of Central Excise,
Customs and Service Tax, Belgaum
No. 71, Club Road
Central Excise Building
Belgaum - 590 001 .........Respondent
Appearance:
None for the Appellant Mr. H. Jayathirtha, Superintendent (AR) for the Respondent Coram:
Hon'ble Mr. P. Dinesha, Member (Judicial) Hon'ble Mr. Pullela Nageswara Rao, Member (Technical) Final Order No. 20197/2025 Date of Hearing: 14.08.2024 Date of Decision: 13.02.2025 Per: Pullela Nageswara Rao This appeal is filed against the Order-in-Appeal No. 452/2012 dated 14.09.2012 passed by the Commissioner of Central Excise (Appeals), Mangalore.
2. The brief facts are that the appellants are manufacturers of P & P Medicines falling under Chapter 30 of Central Excise Tariff Act, 1985. They manufacture the said goods on their own account and are clearing the same on payment of duty, and are also clearing samples free of Page 1 of 4 Central Excise Appeal No. E/3550/2012 cost to physicians as part of marketing strategy and have been paying duty on the value arrived at on the cost construction method in terms of Section 4 of Central Excise Act, 1944 read with Rule 8 of the Central Excise Valuation Rules, 2000. During the relevant period i.e. from June 2008 to April 2010, they cleared physician samples by discharging duty @ 110% of the cost of production. Alleging that the method of valuation adopted by the appellant is not correct as the said physician samples cleared attracts valuation under Section 4 of Central Excise Act, 1944 read with Rule 4 of Central Excise Valuation Rules, 2000. Accordingly, Show-cause notices were issued on 04.06.2009, 08.02.2010 and 12.10.2010 for the period from June 2008 to April 2010 demanding a total differential duty of Rs. 7,53,772/- with interest and proposal for imposition of penalty. On adjudication demands were confirmed along with interest and imposed penalty. Aggrieved by the said orders, they filed appeal before the Commissioner (Appeals), who has rejected the appeals vide Order-in-Appeal No.452/2012 dated 14.09.2012. Aggrieved by the impugned order this appeal is filed before the Tribunal.
3. During the hearing, none present for the appellant despite notice. Heard the learned Authorised Representative (AR) for the Revenue. The learned AR for the Revenue submitted that even though the notices were sent to the appellant in the past fixing the date of hearing none appeared for the appellant nor there was any request for adjournment. It is his contention that further adjournment will not yield any result. Consequently, the appeal is taken for hearing on the basis of records and after hearing the learned AR for the Revenue. Page 2 of 4
Central Excise Appeal No. E/3550/2012
4. Learned AR submits that the issue of valuation of physician sample is no more res integra and covered by the recent judgment of Tribunal at Bangalore in the case of M/s. Amazon Drugs Pvt. Ltd. Vs. CCE, Bangalore vide Final Order No. 20687/2023 dated 14.07.2023 and in the appellant's own case vide Final order No. 21164/2023 dated 31.10.2023 in Appeal No. E/1665/2011. He further submits that the Tribunal taking note of the principle of law settled by the Larger Bench of the Tribunal in the case of Cadila Pharmaceuticals Ltd. Vs. Commr. of C.Ex. Ahmedabad-II 2008 (232) E.L.T. 245 (Tri.-LB) and Hon'ble Supreme Court in Medley Pharmaceuticals Ltd. Vs. Commr. of C. Ex. & Cus., Daman - 2011 (263) E.L.T. 641 (S.C) held that the physician samples cleared adopting Rule 8 of the Central Excise Valuation Rules, 2000 is contrary to the law laid down by the Hon'ble Supreme Court and the correct method of valuation is under Section 4 of Central Excise Act, 1944 read with Rule 4 of the Central Excise Valuation Rules, 2000. He submits that the appeal is thus liable for dismissal.
5. We have carefully considered the grounds of appeal and submissions of appellant advanced by the learned AR for the Revenue. The short issue for determination is, whether the valuation of physician sample be in accordance with Rule 8 or Rule 4 of the Central Excise Valuation Rules, 2000. 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 Page 3 of 4 Central Excise Appeal No. E/3550/2012 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 been accepted by the department. Therefore, we hold that physician samples have to be valued on pro-rata basis for the relevant period."
6. 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."
7. We do not find any reason not to follow the judgment of this Tribunal in Amazon Drugs Pvt. Ltd.'s case and in appellant's own case cited, supra. Consequently, following the said judgment, the impugned order is upheld and the appeal being devoid of merit, accordingly is dismissed.
(Order pronounced in Open Court on 13.02.2025) (P. Dinesha) Member (Judicial) (Pullela Nageswara Rao) Member (Technical) pr/iss Page 4 of 4