Custom, Excise & Service Tax Tribunal
Daman vs Softec Pharma Pvt Ltd on 9 August, 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
West Zonal Bench, Ahmedabad
Cross Application No. E/Cross/159/2010
Appeal No. E/923/2010-DB
(Arising out of Order-in-Appeal No. AKP/321/DMN/SDMN/2009-2010 dated
23.12.2010 passed by Commissioner of Central Excise & Service Tax -
Daman)
C.C.E. & S.T.- Service Tax, Daman - Appellant
Vs.
Softec Industries Ltd. - Respondent
Represented by:
For the appellant : Shri J.K. Kinariwala, Dy. Commr (AR) For the respondent : None CORAM:
Hon'ble Mr. Ramesh Nair, Member (Judicial) Hon'ble Mr. Raju, Member (Technical) Date of Hearing/Decision: 09.08.2018 ORDER NO. A/11750 / 2018 Per: Ramesh Nair The brief facts of the case are that the appellants have sold the physician sample to the brand owner and paid the duty on applying the value under the provision of section 4 A of Central Excise Act 1944. Later on they filed the refund claim on the ground that the duty should have been correctly paid on transaction value in terms of section 4. The original authority rejected the refund by order in original which was set aside by the Commissioner (A) by allowing the appeal of the appellant on the ground that the correct valuation has to be done under section 4 as the physician's samples were sold to the brand owner. The Revenue filed the present appeal.
2 E/923/2010-DB
2. Shri K.J. Kinariwala, Ld. Dy. Commr.(A.R.) appearing on behalf of Revenue reiterates the grounds of the appeal. He submits that the appellant had correctly paid the duty at the time of clearance under section 4 on the value which is proportionate to value arrived at valuation under section 4A. Therefore, there is no question of refund arises.
3. None appeared on behalf of the respondent.
4. On careful consideration of the submissions made by Ld. AR, we find that the fact is not under dispute that the appellant had initially paid the duty on free sample on proportionate of value under section 4 A of the trade pack. Since the physician's samples were sold by them to the brand owner by raising the sale invoice, the Excise duty should have been paid on the transaction value. The proportionate of section 4A is applicable only in a case where the physician sample are not sold and cleared free of cost, which is not the case here. Therefore, the Ld. Commissioner (A) has rightly observed that the duty should have been paid under section 4. The relevant finding of the Ld. Commissioner (A) is reproduced below:
"9. I have examined the matter. I find that the show cause notice proceeds on the assumption that the physician samples manufactures by the appellants are covered by the Standards of Weights & Measures Act, 1976, and the Packaged Commodities Rules, 1977, to attract assessment on MRP basis. The appellants have contested this. I find that medicines are covered by DPCO, 1995 and as per rule 34(e) of the Packaged Commodities Rules, 1977, goods covered under the DPCO, 1995 are exempt from the provisions of Packages Commodities Rules, 1977. But as per the DPCO, 1995 issued under the Essential Commodities Act, 1956, the appellants still have to comply with the requirements of the declaration of retail sale price as required under the said DPCO, 1995, particularly rules 14 & 15 thereof. A perusal of Rule 14 & 15 of the DPCO, 1995, reveals that it is applicable only in respect of those goods which are intended for sale in retail. There is no dispute that, so far as the physician samples are concerned, they are not intended for retail sale and, printing the MRP on the said physician sample packs.
10. It, therefore, emerges that so far as the physician samples are concerned there is no law which requires them to print any MRP on them. Thus, the physician samples are concerned there is no law which requires them to print any MRP on them. Thus, the physician 3 E/923/2010-DB samples go out of the purview of Section 4A of Central Excise Act, 1944.
11. If section 4A is not applicable, the valuation of the Physician samples will have to be done as per Section 4 of Central Excise Act, 1944. Section 4(1)(a) can be invoked only if there is a sale of the product at arms length and price is the sole consideration of the sale. In the present case the samples were sold to third parties at „transaction value‟ at arms length. In that case duty will have to be charged on this value which they had been doing during the relevant period. It is not the case of the department that the „transaction value‟ was not genuine or that it was influenced by any extra commercial considerations. Thus, duties have been correctly paid by the appellants and there is no case for paying duty on the basis of MRP. If section 4(1)(a) is applicable there is no need to go to section 4(1)(b) to invoke the Valuation Rules.
12. Further, CESTAT, Ahmedabad, in the case of CCE, Daman vs Sidmak Laboratories (India) P Ltd. reported in 2009(242) ELT255 (Tri-Ahmd), has held that when physician samples are sold in wholesale, duty will have to be charged on the "transaction value‟. It has been rightly pointed that the Boards Circular dated 19.02.2010 does not cover such case.
13. There is a casual mention of section 12B in the SCN implying thereby that the refund is also hit by the bar of unjust enrichment. The adjudication Order also does not dwell much upon this aspect, probably because the refund was rejected on merit itself. This aspect needs to be gone into by the Asst. Commr. in details.
14. In view of the above, the appeal is allowed. The refund should be sanctioned if it is, otherwise, due after examining the aspect of unjust enrichment and time bar."
4. On going through the above finding, we are of the view that the Ld. Commissioner (A) has applied the correct provision of section 4. Therefore, the differential duty is rightly refundable in accordance with the law. The Ld. Commissioner (A) has kept the issue of unjust enrichment and time bar open, which may be examined by the Adjudicating authority. As per are above discussion the order is upheld. Revenue's Appeal is dismissed.
(Dictated and pronounced in the open Court)
(Raju) (Ramesh Nair)
Member (Technical) Member (Judicial)
DS