Customs, Excise and Gold Tribunal - Mumbai
Sun Pharmaceutical Industries, S.V. ... vs Commissioner Of Central Excise on 14 December, 2004
Equivalent citations: 2005(100)ECC150, 2005(183)ELT42(TRI-MUMBAI)
ORDER S.S. Sekhon, Member (T)
1. These appeals are taken up for disposal and are being disposed of by this common.
2 After hearing both sides, and considering the issue, it is found:
a) duties and penalties have been imposed in this case on a manufacturer of P and P medicament on the grounds that the appellants have cleared their finished products namely medicaments packed in commercial sale pack on payment of duty at prices charged from their wholesale dealers. However, physician samples of the same brand of medicament were cleared by the appellants in different i.e. smaller quantity packing, by paying duty on such physician sample packs, at prices lower than the pro rata price at which duty were paid for the packages removed as commercial medicament for sale to the wholesale dealers.
b) The physician samples in similar packs so removed were also sold to the wholesale dealers, but the prices were much lower when compared the pro rata price. The revenue authorities have confirmed this valuation as applied to physician samples to be incorrect and have redetermined the values by pro rata raising the same to that of commercial packs. For example, the sale pack contained 10 tablets and physician sample was for 2 or 4 tablets, say for product Aztor-10, the Central Excise department found that the assessable value of Aztol-10 (commercial sale packs of 1 tablets) was Rs. 95.35, whereas the assessable value for Aztol-10 (physician sample pack of 2 tablets) was only Re 1/- and on pro rata basis it was to be raised to Rs. 19.07 and differential duty was required to be paid. Consequent confirmation of the less charge demand resulted in penal liabilities under Rule 173Q (1) read with Section 11AC and interest under Section 11AB and penalties under Rule 209A on the Director and other employee. Hence these appeals.
3. The Ld Commissioner found that P and P medicaments in normal pack as well as smaller packs (physician sample packs), were sold to their wholesale distributors and the wholesale distributor further distributed the physician samples free to doctors. He also found that there was material and admissions that the price of the physician sample packs was different due to reason of free distribution of the same and that the cost of production of both the goods remains the same and also there was admission that in the declarations and the price lists filed under Rule 173C, the assessee mentioned that price of comparable goods were not known. It was found that the notices arrived at an assessable value under Rule 6 (b) (ii) which was not correct inasmuch as value was required to be determined under -Rule 6 only when the value pf such goods could not be determined under Rules 4 and 5 of the Valuation Rules, 1975 and in this case the value of physician samples was determinable under Rule 4 of the Valuation Rules by applying pro rata value. This finding of the Commissioner to apply Rule 4 of the Valuation Rules cannot be upheld for following reasons:
i) for medicaments, there is a specific Chapter Note which stipulates that conversion of powder into tablets or capsule, labelling or relabelling containers intended for consumers and repacking from bulk to retail packs or the adoption of any other treatment to render the product marketable to the consumer shall amount to manufacture. Therefore, a pack of ten tablets when reconverted into a pack of 2 or 4 tablets would amount to manufacture and when manufacture takes place, obviously the raw material does not remain the same and a new commodity emerges. A raw material cannot be comparable goods or similar goods as the final product. Therefore, when a pack of ten tablets and pack of 2 or 4 tablets are not similar or comparable goods for valuation purposes, they would be reckoned to be under Rule 4.
ii) In this case, the physician samples are being sold at a value. That value cannot be questioned otherwise. It is well settled by the Supreme Court in the case of CCE, New Delhi v. Guru Nanak Refrigeration Corporation, 2003 (153) ELT 249 (SC) that the price declared by assessee correct although less than cost of manufacture of raw material, manufacturing cost and manufacturing profit could get be Section 4 (1)(a) value. Following the same, in this case therefore, when the sale price of the physician sample to the wholesale dealers is not impugned otherwise, the same has to be accepted under Section 4 (1)(a).
iii) It is found that the Show Cause Notice is dated 22.8.2000 covering the period 1.8.1995 to 31.8.2000 invoking the proviso to clause of Section 11A (1). It is well settled that the proviso clause can be invoked only if there is material to support the ingredients required to invoke that clause. In the facts of this case, the allegation of suppression of facts etc cannot be sustained as the fact that the appellant was manufacturing physician samples was fully known to the authorities and was declared, as duty paying documents and clearance documents were regularly filed and the unit was audited from time to time. It was open to the authorities to seek clarification of the declarations made in list filed under Rule 173C and to seek the costing details. That not having been done and it is now well settled that some positive act has to be found on part of the assessee in keeping away material evidence which would have enabled the assessing officers and the price list approving officers to arrive at incorrect value would only result in the invocation of the proviso clause and no such material is existing. Therefore, it is found that the appellant have a good case on bar of limitation also.
iv) When we find that on merits and on limitation the duties cannot be sustained, we find no reasons for invoking the penal clauses and imposition of penalties on all the appellants herein.
4. In view of the findings, the orders on duty demand and penalties and other liabilities as arrived at are required to be set aside and appeals allowed.
5. Ordered accordingly.
(Dictated in Court)