Custom, Excise & Service Tax Tribunal
Srushti Pharmaceuticals Pvt Ltd vs Bangalore-Ii on 3 January, 2025
Central Excise Appeal No. E/25230 to 25232/2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
BANGALORE
REGIONAL BENCH, COURT NO. 2
Central Excise Appeal No. 25230 of 2013
(Arising out of Order-in-Appeal No. 406-408/2012-C.E dated 30.11.2012
passed by the Commissioner of Central Excise (Appeals-I), Bangalore.)
M/s. Srushti Pharmaceuticals Pvt. Ltd.
Plot No. 154, 10th Main, 3rd Phase,
Peenya Industrial Area, Peenya,
Bangalore - 560 058. ..........Appellant(s)
VERSUS
The Commissioner of Central Excise
Bangalore II Commissionerate,
P.B. No. 5400, C.R. Building,
Queen's Road,
Bangalore - 560 001. ...........Respondent(s)
WITH Central Excise Appeal No. 25231 of 2013 (Arising out of Order-in-Appeal No. 406-408/2012-C.E dated 30.11.2012 passed by the Commissioner of Central Excise (Appeals - I), Bangalore.) M/s. Srushti Pharmaceuticals Pvt. Ltd.
Plot No. 154, 10th Main, 3rd Phase, Peenya Industrial Area, Peenya, Bangalore - 560 058. ..........Appellant(s) VERSUS The Commissioner of Central Excise Bangalore II Commissionerate, P.B. No. 5400, C.R. Building, Queen's Road, Bangalore - 560 001. ...........Respondent(s) AND Central Excise Appeal No. 25232 of 2013 (Arising out of Order-in-Appeal No. 406-408/2012-C.E dated 30.11.2012 passed by the Commissioner of Central Excise (Appeals -I), Bangalore.) M/s. Srushti Pharmaceuticals Pvt. Ltd.
Plot No. 154, 10th Main, 3rd Phase, Peenya Industrial Area, Peenya, Bangalore - 560 058. ..........Appellant(s) VERSUS The Commissioner of Central Excise Bangalore II Commissionerate, P.B. No. 5400, C.R. Building, Queen's Road, Bangalore - 560 001. ...........Respondent(s) Page 1 of 9 Central Excise Appeal No. E/25230 to 25232/2013 Appearance:
Mr. Rajesh Chandra Kumar Rohra, Senior Advocate with Ms. Sakhee Mehta, Advocates for the Appellant. Mr. Rajesh Shastry, Superintendent (AR) for the Respondent.
Coram:
Hon'ble Mr. P.A. Augustian, Member (Judicial) Hon'ble Mr. Pullela Nageswara Rao, Member (Technical) Final Order Nos. 20006 - 20008 /2025 Date of Hearing: 05.07.2024 Date of Decision: 03.01.2025 Per: P.A. Augustian The issue in the present appeals is regarding valuation of the 'physician samples' manufactured by the Appellant and sold on principal to principal basis to other pharmaceutical manufacturers/brand owners of such products.
2. The facts in brief are M/s. Srushti Pharmaceuticals Pvt., Ltd, the Appellant is manufacturing 'physicians samples' under 'principal to principal' basis for other 'pharmaceutical manufacturers/brand owners of the medicaments, who have in terms of the principal to principal contract entered with the Appellant, require the Appellant to manufacture and sell to them, 'physician samples' for use by them for marketing their medicament products. Since the transaction value was as per the contract between the 'principal to principal', Appellant had discharged the Central Excise duty liability by adopting the transaction value under Section 4 of the Central Excise Act, 1944. However, the department, alleging that the method of valuation adopted by the Appellant is not proper on the ground that Appellant had sold 'physician samples' and the same were intended for 'free supply' to physicians, Page 2 of 9 Central Excise Appeal No. E/25230 to 25232/2013 hence the argument advanced by the Appellant nor the case laws relied upon by the appellant are not relevant in the instant case and a show cause notice was issued. Accordingly, the Adjudication authority considered the issue and for the period, July 2005 to April 2010 confirmed the demand of duty along with interest and also imposed penalty, and also confirmed demands with interest for the periods, July, 2010 to July, 2011 and August 2011 to November, 2011. Aggrieved by said orders, appeals were filed before the Commissioner (Appeals) and the Commissioner (Appeals) as per the impugned Order-in-Appeal No. 406-408/2012-CE dated 30.11.2012 upheld the order issued by the Adjudication authority. Aggrieved by said orders, present appeals are filed, and the details are as follows.
Amount involved
Sl.No. Appeal No. Period
in Rs.
July 2005 to April Duty: 15,99,187/-
1 E/25230/2013
2010 Penalty: 15,99,187/-
July 2010 to July
2 E/25231/2013 Duty: 1,70,823/-
2011
August 2011 to
3 E/25232/2013 Duty: 29,836/-
November 2011
3. Since the issue involved in all the 3(Appeals) is common they are being disposed by this order.
4. When the Appeal came up for hearing, the Ld. Counsel for the Appellant submits that issue is no more res integra and the transaction value adopted by the Appellant merits acceptance in view of the decision of the Hon'ble Supreme Court in the matter of CCE, Surat Vs. M/s Sun Pharmaceutical Industries Ltd -2015 (326) E.L.T 3 SC). The Ld. Counsel also relied on the following decisions; Page 3 of 9
Central Excise Appeal No. E/25230 to 25232/2013
1. CCE, Thane Vs. Meghdoot Chemicals Ltd. 2022 (380) ELT 531 (SC)
2. Jayanti Food Processing (P) Ltd Vs. CCE. Rajasthan.
2007 (215) ELT 327 (SC)
3. Emil Pharmaceutical Industries (P) Ltd Vs. CCE, Thane, 2016 (334) ELT 143 (Tri-Bom)
4. Omni Protech Drugs Pvt Ltd Vs. Commissioner of Central Excise, Pune-1, 2011(274) ELT 377 (Tri- Mumbai)
5. Mayer Health Care Vs. Asst. Commr of C.Ex, Blore- II, 2009 (247) ELT 488 affirmed in Sun Pharmaceutical Industries, 2015 (326) ELT 3 (SC)
6. Themis Laboratories Pvt Ltd. Vs. CCE, Mumbai. 2012 (286) ELT 244 (Tri- Mumbai) affirmed in Sun Pharmaceutical Industries, 2015 (326) ELT 3 (SC)
7. Meghdoot Chemicals Ltd Vs. CCE, Thane 2015 (320) ELT 643 (Tri-Bom)
8. Zyg Pharma Pvt Ltd Vs. CCE, Indore, 2017 (348) ELT 389 (Tri-Del)
9. CC Goa Vs. Cosme Remedies Ltd, 2016 (344) ELT 379 (Tri-Mumbai)
10. Medispray Laboratories P Ltd. Vs. CCE, Goa, 2017 (5) GSTL 300 (Tri- Mumbai)
11. Gelnova Laboratories (I) Pvt. Ltd. Vs. CCE, Belapur, 2014 (300) ELT 437 (Tri-Mumbai)
5. The Ld. Counsel for the Appellant submits that; even though the 'Patent and Proprietary Medicaments' in respect of which the 'physician samples' were manufactured by the Appellant are notified for the propose of Section 4A, of the Central Excise Act, 1944, [Section 4A- Valuation of excisable goods with reference to retail sale price], the physician samples cleared are not required to be affixed with 'Maximum Retail Price (MRP)' as the same are not meant for 'sale' and therefore the question of discharging duty under Section 4A, ibid, does Page 4 of 9 Central Excise Appeal No. E/25230 to 25232/2013 not arise. The Ld. Counsel further submits that as per the clarification issued by the Board vide Circular No. 625/16/2002-CX dated 28.02.2002, there is no statutory requirement under the Standard of Weights and Measures Act, 1976 to declare the 'Retail price' on the packages, if it is meant as 'physician samples' and no 'MRP' to be marked, since it is prohibited from being sold. Thus, the issue of valuation of 'physician samples' would have to be determined under Section 4 of the Act, ibid and that the Board's Circular No. 813/10/2005-CX dated 25.04.2005 also recognized that 'free samples' are also to be valued under Rule 4 of Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000. The Ld. Counsel further submits that applying the Board Circular requiring that value of 'physician samples' should be determined under Rule 4 of the Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000, by taking into consideration deemed value under Section 4A(1), despite the availability of transaction value under Section 4(1(a) of the Act, ibid is against the statutory provisions in as much as Rule 4 of the Central Excise Valuation(Determination of price of Excisable Goods) Rules, 2000 is only a general Rule and provides a machinery provision for adjustment in value on account of difference in the date of delivery. As regards reliance on the decision of this Tribunal in the matter of M/s Amazon Drugs Pvt Ltd Vs. CCE, vide Final Order No. 20687/2023 dated 14.07.2023, the Ld. Counsel submits that the said case relates to Appellant's clearance directly of 'physician samples' for itself and therefore applying the assessable value @ 115% or 110% of cost of production under Rule 8 of the Valuation Rules is upheld. However, it was not a case of manufacture and clearance of Page 5 of 9 Central Excise Appeal No. E/25230 to 25232/2013 'physician samples' on a principal to principal basis under a transaction value under Section 4(1)(a) of the Act, ibid, as is in the present case.
6. The Ld. Counsel also relied on the following decisions.
1. Elvina Pharmaceuticals Ltd. Vs. Commissioner of Central Excise, Customs and Service Tax, Belgaum vide Final Order No. 21191/2023 dated 30.08.2023
2. Elvina Pharmaceuticals Ltd. Vs. The Commissioner of Central Excise vide Final Order No. 21164/2023 dated 31.10.2023 (CESTAT, Bangalore).
3. Wallace Laboratories Pvt. Ltd. Vs. Commissioner of Central Excise, Belgaum vide Final Order No. 20136- 20138/2024 dated 14.03.2024 (CESTAT, Bangalore).
4. M/s. Wintac, Limited Vs. Commissioner of Central Excise, Bangalore-III Commissionerate vide Final Order No. 20458/2024 dated 15.04.2024 (CESTAT, Bangalore).
5. Medley Pharmaceuticals Ltd. Vs. Commissioner of C.Ex., & Cus., Daman 2011 (263) E.L.T. 641 (SC).
6. Commissioner of C.Ex., Bangalore-I Vs. Bal Pharma Ltd.- 2010 (259) E.L.T 10 (SC).
7. Commissioner of C.Ex., Calicut Vs. Trinity Pharmaceuticals Pvt. Ltd. 2005 (188) E.L.T 48 (Tri.- Bang.)
8. Cadila Pharmaceuticals Ltd Vs. Commr. of C.Ex., Ahmedabad-II 2008 (232) E.L.T 245 (Tri.-LB)
9. Blue Cross Laboratories Ltd. Vs. Commr. of C.Ex., Mumbai 2006 (202) E.L.T 182 (Tri.-LB)
10. Indian Drugs Manufacturer's Assocn. Vs. Union of India 2008 (222) E.L.T 22 (Bom.)
11. Goa Antibiotics & Pharmaceuticals Ltd. Vs. Commissioner of C.Ex., Goa 2014 (314) E.L.T 546 (Tri. - Mumbai)
7. As regards reliance on the similar decisions by the Adjudication authority, Ld. Counsel submits that in such cases the 'physician samples' were produced by the Appellant and supplied free of cost. As Page 6 of 9 Central Excise Appeal No. E/25230 to 25232/2013 regards the Appeal E/25230/2013, the Ld. Counsel submits that the demand is for the period from July 2005 to April, 2010 and there is no reason or justification for invoking the extended period of time limitation, since the Appellants were paying excise duty and filing returns as per the existing provisions. In the absence of any allegation regarding suppression of facts or fraud, invoking the extended period of limitation is also unsustainable.
8. The Ld. AR also relied on the following decisions;
1. Blue Cross Laboratories Ltd. Vs. Commr. of C.Ex. Mumbai
- 2006 (8) TMI 220 - CESTAT, Mumbai
2. Indian Drugs Manufacturers Association Vs. Union of India - 2006 (9) TMI 94 - Bombay High Court.
3. M/s Wintac Ltd. Vs. CCE, Bangalore III Commissionerate
- 2024 (6) TMI 1004 - CESTAT Bangalore.
4. Commr of Central Excise & Customs. Surat Vs. Mis Sun Pharmaceuticals Inds. Ltd. & Ors. 2015 (12) Tmi 670- Supreme Court
5. Medlev Pharmaceuticals Ltd. Vs. The Commissioner Of Central Excise 2011 (1) Tmi.13- Supreme Court
6. Commissioner Of C. Ex. Bangalore I Versus Bal Pharma Ltd. 2010 (9) Tmi 307 Supreme Court
8. Wallace Laboratories P. Ltd. Vs. Commissioner Of Central Excise. Belgaum-2024 (3) Tmi 689-Cestat Bangalore
6. M/s. Amazon Drugs Pvt. Ltd. Vs.Commissioner Of Central Excise (Appeals-II), Bangalore. 2023 (Z) Tmi 580-Cestat Bangalore
7. M/s. Medispray Laboratories Pvt. Ltd. M/S Meditab Specialities Pvt. Ltd.. And M/S Okasa Pvt. Ltd. Vs. Commissioner Of Central Excise. Goa-2017 (2) Tmi 309- Cestat Mumbai
8. M/s. Zyg Pharma Pvt. Limited. K.N. Mungi, Manager.
Accounts & Auth. Signatory Vs. Cce. Indore (Vice- Versa)-2016 (12) Tmi 524-Cestat New Delhi Page 7 of 9 Central Excise Appeal No. E/25230 to 25232/2013
9. Commissioner Of Central Excise, Goa Vs. Cosme Remedies Ltd. And Vica-Versa - 2016 (4) Tmi 323-Cestat Mumbai
10. M/s. Gelnova Laboratories (1) Pvt Ltd Vs. Commissioner Of Central Excise -2014 (2) Tmi 581 Cestat Mumbai
11. Goa Antibiotics & Pharmaceuticals Ltd., Vs. CCE., Goa.
2013 (12) Tmi 390-Cestat Mumbai
12. Omni Protech Drugs Pvt. Ltd. Vs. Cce Pune 1-2011 (6) Tmi 532-Cestat. Mumbai
13. Themis Laboratories Pvt Ltd.. & Meghdoot Chemicals Ltd., Vs. Commissioner Of Central Excise. Mumbai - 2011 (2) Tmi 713-Cestat, Mumbai
14. Mayer Health Care Pvt. Ltd. Vs. Asstt. Commr. Of C. Ex.. Bangalore-II-2009 (4) Tmi 704-Cestat, Bangalore
15. Cadila Pharmaceuticals Ltd. Vs. Commr. Of C. Ex., Ahmedabad-Ii-2008 (9) Tmi 98-Cestat Ahmedabad
16. Commissioner Of C. Ex., Calicut Vs. Trinity Pharmaceuticals Pvt. Ltd.- 2005 (6) Tmi 79-Cestat, Bangalore
9. Heard both sides and perused the records. As submitted, the issue is no more res integra. The Hon'ble Supreme Court in the matter of CCE, Surat Vs. M/s Sun Pharmaceutical (supra), wherein it was categorically held that:-
"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 since the 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 Page 8 of 9 Central Excise Appeal No. E/25230 to 25232/2013 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 wrong 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."
10. We find that the facts of the instant case are similar to the issue decided by the Hon'ble Supreme Court in the matter of CCE, Surat Vs. M/s Sun Pharmaceutical (supra) and therefore covered by the above judgment, hence appeals are sustainable.
11. In view of the above discussion the appeals are allowed with consequential relief, if any in accordance with law.
(Order dictated and pronounced in open court on 03.01.2025) (P.A.Augustian) Member (Judicial) (Pullela Nageswara Rao) Member (Technical) hr Page 9 of 9