Custom, Excise & Service Tax Tribunal
R K Parmar vs Vapi on 26 November, 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
West Zonal Bench, Ahmedabad
Appeal No. E/1886-1888/2010-DB
(Arising out of OIA No. SKSS/251-253/VAPI/2010 dated 28/10/2010 passed
by Commissioner of Central Excise, Customs and Service Tax-VAPI)
Vapi Organic Chemicals Pvt. Ltd. - Appellant
Vs.
C.C.E & S.T. - Vapi - Respondent
Represented by:
For the appellant : Shri S.J. Vyas, Advocate For the respondent : Shri Amit Kr. Mishra, Dy. Commr. (AR) CORAM:
Hon'ble Mr. Ramesh Nair, Member (Judicial) Hon'ble Mr. Raju, Member (Technical) Date of Hearing: 02.11.2018 Date of Decision: 26.11.2018 ORDER NO. A/12623-12625/2018 Per: Raju These appeals have been filed by M/s Vapi Organic Chemicals Pvt.
Ltd., Shri R.K. Parmar and Shri HG Patel against confirmation of demand of duty on physician samples and imposition of penalties.
2. We find that Revenue had demanded Excise Duty in respect of Physician samples manufactured by the appellant on job work basis for other parties. The said physician samples were in dispute by other parties free of cost, i.e., to Doctors, etc. Revenue has demanded Excise duty on MRP basis. We find that the issue is squarely covered by the decision of Tribunal in the case of SOFTSULE Pvt. Ltd 2018 (06) TMI 985 (Tri- Bom). In para 4&5 of the said decision following has been observed:
2 E/1886-1888/2010-DB "4. We have gone through the rival submission, in the case of Sun Pharmaceuticals Industries Ltd. (supra) wherein Hon'ble Apex Court has observed as follows:
"10. As mentioned above, the assessee had put up the defence that since physician samples were not meant for sale by distributors but were to be given free of cost to the physicians, the assessee had charged lesser price. This statement of the assessee had not been doubted. The only reason in the show cause notice given was that the since physician samples were given free of cost by the distributors and no price was charged, the case was not covered by the provisions of Section 4(1)(a) of the Act. This is clearly fallacious and wrong reason. The transaction in question was between the assessee and the distributors. Between them, admittedly, price was charged by the assessee from the distributors. What ultimately distributors did with these goods is extraneous and could not be the relevant consideration to determine the valuation of excisable goods. When we find that price was charged by the assessee from the distributors, the show caUse notice is clearly founded on a wrung reason. The case would squarely be covered under the provisions of Section 4(1)(a) of the Act. In view thereof, the Central Excise Rules would not apply in the instant case.
11. As a result, we are of the opinion that the decision dated 10- 11-2006 rendered by the CESTAT depicts the correct position of law and rightly holds that the case would be covered by the provisions of Section 4(1)(a) of the Act and in view thereof Rule 6(b)(ii) of the Rules would not apply. Resultantly, Civil Appeal Nos. 3742-3744 of 2007 of the Revenue fail and are hereby dismissed."
In view of the aforesaid decision of Hon'ble Apex Court, the assessment of physician sample sold by the appellant to others who may be distributing the same free of cost are to be assessed under Section 4(1)(a) of the Central Excise Act, 1944. Thus, the demand of duty of value arrived at on the basis of MRP is not sustainable.
5. In the case of Omni Protech Drugs Pvt. Ltd. Vs. Commissioner of Central Excise, Pune-I-2011 (274) ELT 377 (Tn.- Mumbai) observed as follows: -
"6. The issue in this matter before us is that whether the physician samples cleared by the appellants to the brand owner on payment of duty on the transaction value arrived at as per the formula laid down by the Hon 'ble Apex Court in the case of Ujagar Prints (supra) i.e. cost of raw materials + conversion charges or the physician samples manufactured on job work basis are to be cleared as per Section 4A of the Act i.e. less abatement on pro rata basis. The case law cited by the learned SDR are not relevant to the facts of the case as in those cases the manufacturers themselves manufacturing the physician samples and distributing the same to Physicians! Doctors free of cost, therefore no transaction value was available. It is an admitted fact that P&P medicaments are to be cleared on MRP basis value 3 E/1886-1888/2010-DB therefore on those cases it was held as valuation of physician samples is to be on the basis of MRP basis under Section 4A of Act.
7. In this case, it is clear that the appellant is not clearing these physician samples to the Physician! Doctor free of cost but the appellant is clearing these physician samples on transaction value arrived at after including cost of raw materials + job charges as held by the Hon 'ble Apex Court in the case of Ujagar Prints to the brand owner on principal to principal basis. Therefore, the case laws cited by the learned SDR are not applicable to the facts of this case. The ratio laid down by the Themis Laboratories Pvt. Ltd. (supra) is that if the manufacturer clearing the physician samples to the brand owner on transaction value, the transaction value is the assessable value. Therefore, following the ratio laid down in the Tribunal's decision in the case of Themis Laboratories Pvt. Ltd. (supra) we hold that the appellant has correctly valued their product i. e. cost of raw material inputs + job charges. In view of the above observations, we set aside the impugned order and allowed the appeal without going into the issue of limitation.
In view of above the assessable value of physician sample which are manufactured on job work basis for others who may be distributing the same free of cost, has to be done on the basis of value arrived at in terms of decision of Hon'ble Apex Court in the case of Ujagar Prints (supra). Demand on the basis of MRP cannot be sustained. In view of the above the demand is set aside and appeals are allowed."
Relying on the aforesaid decision, the appeal of M/s Vapi Organic Chemicals Pvt. Ltd. is allowed. Consequently appeals of Shri RK Parmar and Shri HG Patel are also allowed.
(Pronounced in the open Court on 26.11.2018.) (Raju) (Ramesh Nair) Member (Technical) Member (Judicial) DS