Custom, Excise & Service Tax Tribunal
M/S. Glenmark Pharmaceutical Ltd vs Commissioner Of Central Excise & ... on 17 October, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/2597/96 [Arising out of Order-in- Appeal No. A/334/96 dated 30-8-1996 passed by the Commissioner of Central Excise & Customs(Appeals), Pune ] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) Honble Mr. C.J. Mathew, 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 :
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?
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M/s. Glenmark Pharmaceutical Ltd
:
Appellant
VS
Commissioner of Central Excise & Customs, Nasik
:
Respondent
Appearance
Shri. Rajiv Mohan Patkar, Consultant for the Appellants
Shri. S.V. Nair, Asstt. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr Ramesh Nair, Member(Judicial)
Honble Mr. C.J. Mathew, Member(Technical)
Date of hearing: 17/10/2016
Date of decision: /2016
ORDER NO.
Per : Ramesh Nair
The issue involved is valuation of physicians sample of medicine cleared during the period February, 1995. As per the Revenues contention that value of the physicians sample has to be determined by taking into consideration the pro-rata value of the trade pack whereas the appellants claim is that valuation of free physicians sample has to be done as per cost construction method.
2. Shri. Rajiv Mohan Patkar, Ld. Consultant appearing on behalf of the submits that issue pertains to the period February, 1995. The very same issue decided by the Honble Larger Bench of this Tribunal in case of Bezel Pharma Pvt Ltd Vs. Commissioner of Central Excise, Mumbai-V[2008(221) ELT 512(Tri. LB)]. The said decision of the Larger Bench has been upheld by the Honble Supreme Court by dismissing civil appeal filed by the Revenue reported as Commissioner Vs. Bezel Pharma Pvt Ltd [2010(255) ELT A14(SC)]. He also relied upon Board Circular No. 643/34/2002-CX dated 1-7-2002 wherein it was clarified that valuation of the physicians sample has to be done under Rule 8 i.e. Cost Construction Method.
3. Shri. S.V. Nair, Ld. Asstt. Commissioner(A.R.) appearing on behalf the Revenue reiterates the findings of the impugned order.
4. We have carefully considered the submissions made by both sides.
5. We find that issue that what should be the method of valuation incase of physicians sample has been decided by the Honble Larger Bench of this Tribunal in case of Bezel Pharma Pvt Ltd(Tri. LB)](supra), wherein it was held as under:
We have heard both sides on the issue referred to us, viz. whether for the period prior to 1-7-2002, when CBEC issued circular clarifying that in respect of physicians samples, the assessable value would be 115% of the cost of production or manufacture of the goods, the assessable value of such samples is to be arrived at on pro rata basis or on the basis of 115% of the cost of production. Undisputedly, the circular is beneficial to the assessees. Therefore, the decision of the Apex Court in Suchitra Components Ltd. v. CCE, Guntur - 2007 (208) E.L.T. 321 (S.C.), holding that a beneficial circular will operate with retrospective effect while an oppressive circular will be applicable only prospectively, is applicable on all fours to the present case and following the ratio thereof, we answer the issue referred to the Larger Bench by holding that for the period prior to 1-7-2002 the assessable value of physicians samples is to be arrived at on the basis of 115% of the cost of production.
2.?The papers are now returned to the original Bench for further orders on the appeal.
Above decision of this Tribunal has been upheld by the Honble Apex Court.
The Board Circular Board Circular No. 643/34/2002-CX dated 1-7-2002 clarified the issue in hand as under:
Valuation Rules Clarifications Circular No. 643/34/2002-CX., dated 1-7-2002 F. No. 6/39/2000-CX 1 Subject : Clarification of doubts under the new Valuation Rules I am directed to refer to Boards letter F. No. 354/81/2000-TRU, dated 30th June, 2002 [2000 (119) E.L.T. T22] clarifying certain points relating to the new valuation provisions made effective from 1-7-2000.
2. The Board has received a number of references from the field formations as well as representations from the trade associations about certain doubts still persisting in the minds of the field officers. These points of doubt are being clarified in the Table enclosed.
3. Field formations may be suitably informed.?
4. Hindi version will follow.?
5. Receipt of this Circular may kindly be acknowledged.?
CLARIFICATIONS ON POINTS OF DOUBT UNDER THE NEW VALUATION PROVISIONS INTRODUCED W.E.F. 1-7-2000
13.
How will valuation of samples be done which are distributed free, as part of marketing strategy, or as gifts or donations ?
Since the goods are not sold Section 4(1)(a) will not apply and recourse will have to be taken to the Valuation Rules. No specific rule covers such a contingency. Except Rule 8 all the other rules cover contingencies where sale is involved in some form or the other. Therefore, the residuary Rule 11 will have to be adopted along with the spirit of Rule 8. In other words, the assessable value would be 115% of the cost of production or manufacture of the goods.
From the above clarification also it is seen that valuation of physicians sample is correctly to be made in terms of Rule 8 of Central Excise Valuation Rules, 2000. In view of the above settled legal position, we do not find any reason to sustain the impugned order. The impugned order is set aside, appeal is allowed with consequential relief, if any, in accordance with law.
(Order pronounced in court on ___________________) C.J. Mathew Member (Technical) Ramesh Nair Member (Judicial) sk 5 E/2597/96