Custom, Excise & Service Tax Tribunal
M/S Medispray Laboratories Pvt. Ltd vs Commissioner Of Central Excise, Goa on 13 December, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II Appeal No. E/1089, 1384 & 1385/07 (Arising out of Order-in-Appeal No. GOA/CEX/SB/16/2007 dated 28.2.2007 passed by the Commissioner of Customs & Central Excise (Appeals), Goa). For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) Honble Shri Raju, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Medispray Laboratories Pvt. Ltd. M/s Meditab Specialities Pvt. Ltd. M/s Okasa Pvt. Ltd. Appellant Vs. Commissioner of Central Excise, Goa Respondent Appearance: Shri Rajesh Ostwal, Advocate for Appellant Shri Sanjay Hasija, Supdt. (AR) for Respondent CORAM: SHRI RAMESH NAIR, MEMBER (JUDICIAL) SHRI RAJU, MEMBER (TECHNICAL) Date of Hearing: 13.12.2016 Date of Decision: 16.01.2017 ORDER NO. Per: Ramesh Nair
The issue involved in the present appeals is valuation of physician samples manufactured and supplied either on loan license basis or on job-work basis. In the case of Okasa Pvt. Ltd., physician samples were manufactured and sold on principal to principal basis under Section 4 of the Central Excise Act on the transaction value. In the case of M/s Meditab Specialities Pvt. Ltd. and M/s Medispray Laboratories Pvt. Ltd., the physician samples were manufactured on job-work basis on behalf of the principal M/s Cipla Ltd. Excise duty was paid on the value i.e. 110% of the manufacturing cost.
2. The Departments contention is that in terms of Boards Circular No. 619/10/2002-CX dated 19.2.2002, the valuation should be done under Rule 4 of the Central Excise Valuation Rules, 2000. Accordingly, the value of the similar medicaments sold in the market shall be taken as the value of the physician samples. Accordingly, a differential duty demand was confirmed and the same was upheld by the Commissioner (Appeals).
3. Shri Rajesh Ostwal, learned Counsel for the appellant submits that the appellant in the present case though manufactured physician samples but they are not the owner of the goods, they are not supplying physician samples free of cost in the market. In the case of Okasa Pvt. Ltd., the sale is on principal to principal basis. Therefore, the transaction value is squarely covered under Section 4(1)(a) of the Central Excise Act, 1944, hence the same cannot be disputed. In case of M/s Meditab Specialities Pvt. Ltd. and M/s Medispray Laboratories Pvt. Ltd., the appellants are manufacturing on job-work basis. Even in this case also, there is deemed sale value and duty is paid on such value. In the facts of the present case, the value as contended by the department shall not apply under Rule 4 of the Central Excise Valuation Rules, 2000. He placed reliance on the following judgments: -
(a) Themis Laboratories Pvt. Ltd. 2012 (286) ELT 244 (Tri-Mum)
(b) Mayer Health Care Pvt. Ltd. 2009 (247) ELT 488 (Tri-Bang)
(c) Omni Protech Drugs Pvt. Ltd. 2011 (274) ELT 377 (Tri-Mum)
(d) Sun Pharmaceuticals Inds. Ltd. 2015 (326) ELT 3 (SC)
(e) Cosme Remedies Ltd. 2016-TIOL-821-CESTAT-MUM
(f) ZYG Pharma Pvt. Ltd. 2016VIL-734-CESTAT-DEL-CE
4. On the other hand, Shri Sanjay Hasija, learned Supdt. (AR) appearing on behalf of the Revenue, reiterates the findings of the impugned order. He emphasized on the Boards Circular No. 813/10/2005-CX dated 25.4.2005, wherein it was clarified that in case of free sample, the value should be determined under Rule 4 of the Central Excise Valuation Rules, 2000. Accordingly, the lower authorities have correctly held the determination of value of physician samples under Rule 4 of Central Excise Valuation Rules, 2000. He placed reliance on the following judgment: -
(a) Sun Pharmaceuticals Inds. Ltd. 2015 (326) ELT 3 (SC)
(b) Johnson & Johnson Ltd. 2016 (338) ELT A138 (SC)
(c) Johnson & Johnson Ltd. 2016 (338) ELT 425 (Tri-Mum)
(d) Meghdoot Chemicals Ltd. 2015 (320) ELT 643 (Tri-Mum)
5. We have correctly considered the submissions made by both sides.
5.1 We find that all the three appellants are manufacturing physician samples not for their own but on behalf of the buyers either on job-work basis or on principal to principal basis. Therefore, the issue of valuation as regards the physician samples is not concerned with the present appellants. Rule 4 of Central Excise Valuation Rules, 2000 shall apply only in those cases where the manufacturer manufacturing the physician samples and they themselves supplying free sample in the market. In the present case, all the three appellants are not supplying physician samples free of cost either in case of job-work basis or in the sale basis, the goods are sold to the principal. In such case, irrespective it is physician samples, the valuation shall be governed by Section 4 of the Central Excise Act. In case of job-work, the value should be in terms of principles laid down by the Hon'ble Supreme Court in the case of Ujagar Prints 1989 (39) ELT 493 (SC). Accordingly, the valuation shall be determined on the basis of cost of raw material + job charges including the profit of the job worker. It is not the case of the Revenue that the value determined by the appellant is less than the value to be arrived at on the principles of Ujagar Prints case.
5.2 As regards the physician samples manufactured and sold by Okasa Pvt. Ltd. to their principal, the transaction is on principal to principal basis. Therefore, whatever goods were sold by the appellant to their principal is correct transaction value in terms of Section 4. In both type of clearances in any circumstances, Rule 4 valuation shall not apply.
6. As per our above discussions, we are of the considered view that valuation proposed by the Revenue in case of all the three appellants, are incorrect and demand confirmed on that basis is not sustainable. We, therefore, set aside the impugned orders and allow the appeals.
(Pronounced in Court on 16.01.2017)
(Raju) (Ramesh Nair)
Member (Technical) Member (Judicial)
Sinha
4
Appeal No. E/1089, 1384 & 1385/07