Custom, Excise & Service Tax Tribunal
Olive Health Care vs Daman on 8 September, 2022
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
Excise Appeal No.2 of 2012
(Arising out of OIA-CS/87-88/DMN/NDMN/11-12 dated 09/11/2011 passed by
Commissioner of Central Excise, Customs and Service Tax-DAMAN)
Olive Health Care ......Appellant
197/2, Athiawad, Near Dargah, Dabhel, Daman, Gujarat
VERSUS
C.C.E. & S.T.-Daman ......Respondent
3rd Floor...Adarsh Dham Building, Vapi-Daman Road, Vapi Opp.Vapi Town Police Station, Vapi, Gujarat - 396191 WITH
1. Excise Appeal No. 3 of 2012 ( Amit Shah)
2. Excise Appeal No. 13802 of 2013 (Olive Health Care)
3. Excise Appeal No. 13803 of 2013 (Olive Health Care)
4. Excise Appeal No. 10264 of 2015 (Olive Health Care) APPEARANCE:
Shri Suyog Bhave, Advocate for the Appellant Shri G.Kirupanandan, Superintendent (AR) appeared for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No . A/ 11114 - 11118 /2022 DATE OF HEARING: 27.07.2022 DATE OF DECISION: 08.09.2022 RAMESH NAIR The brief facts of the case are that the appellant M/s Olive healthcare daman manufacturing PP medicaments falling under Chapter 30 of Central excise Act and cleared the same on MRP basis valuation under Section 4A of Central Excise Act, 1944.The appellant are also manufacturing physician sample of PP medicines on Job work Basis and clearing the same by paying duty at the value arrived at Pro rata of MRP. However, the unit has also manufactured Physician samples of PP medicines on their sale account and they have cleared the same by paying duty on transaction value. The appellant were issued the SCNs for the differential duty alleging that the appellant in the case of physician samples sold by them was to be valued at Pro rata on MRP Basis. The Adjudicating Authority confirmed the demand and also imposed a penalty on Shri Amit Shah, Factory Manager, cum- Authorised Signatory. Being aggrieved by the Order-In-
2|Page E/2-3/2012, E/13802-13803/2013 & E/10264/2015 Original the appellant filed an appeal before the Commissioner (Appeals) which was rejected. Therefore, the Present appeal filed by the appellant.
2. Shri Suyog Bhave, Learned Counsel appearing on behalf of the appellant submits that in the present case the fact is that the appellant have sold the physician sample on behalf of the brand owner of the medicine therefore, the value was correctly arrived at under section 4 (1)(a) of the Central Excise Act, 1944. He submits that the issue is already covered by the various judgments including the Supreme Court judgment as follows:-
Commissioner of C. Ex. & Cus., Surat Vs. Sun Pharmaceuticals Inds. Ltd. reported in 2015 (326) E.LT3 (S.C.) Sun Pharmaceutical Industries Vs. Commissioner of C. Ex., Surat - II reported in 2005 (183) E.L.T 42 (Tri. - Mumbai) Softtech Pharma Pvt. Ltd. Vs. C.C.E, & S.T. Daman (Vice Versa) reported in 2019 (5) TMI 575-CESTAT AHMEDABAD Commissioner of Central Excise, VAPI Vs. Sun Pharmaceutical Inds. Ltd. reported in 2017 (350) E.L.T. 289 (Tri. - Ahmd.) ZYG Pharma Pvt. Ltd. Vs, Commissioner of Central Excise, Indore reported in 2017 (348) E.L.T. 389 (Tri. - Del.) Commissioner of Central Excise, Goa Vs. Cosme remedies Ltd. reported in 2016 (344) E.L.T. 379 (Tri. - Mumbai) Emil Pharmaceuticals Industries P.Ltd. Vs. Commr. Of C.Ex., Thane-II reported in 2016 (334) ELT 143 (tri. Mumbai) Commr. Of C. Ex. Bangalore- I Vs. Banner Pharmacaps (India) Ltd reported in 2017 (347) ELT 686 (Tri. Bang.)
3. Shri G.Kirupanandan, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order.
4. We have carefully considered the submission made by both sides and perused the records. We find that the fact of the case is not under dispute that the appellant have sold the Physician Sample of PP medicine on Principle to Principle basis to the Brand Owner. Therefore, the valuation under Section 4 (1) (a) was correctly done by the appellant. The proposal by
3|Page E/2-3/2012, E/13802-13803/2013 & E/10264/2015 the department that the valuation should have been done by the appellant on Pro- rata of MRP is not applicable in the present case for the reason that such valuation was already opted by the appellant in case of removal of goods manufactured on job work basis for the reason that the said transaction does not involve sale. Since in the present case the transaction is clearly of sale on Principle to Principle basis, the principle of pro rata of MRP shall not apply. This issue has been considered by the Hon'ble Supreme Court in the case of Sun Pharmaceutical Industries Ltd. wherein the following judgment was passed:-
"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 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.
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."
This Tribunal dealing with the same issue in the case of Softtech Pharma Pvt. Ltd. (Supra) wherein the following judgment was passed :-
"4. We have carefully considered submission made by both the sides and perused the records, we find that the appellant is clearing the physician samples on sale basis to their brand name owner and the transaction is of sale on Principle to Principle basis. Since, the physician sample is not ultimately sold, does not carry any MRP, in
4|Page E/2-3/2012, E/13802-13803/2013 & E/10264/2015 such a case, the valuation of the Physician sample, which is other than trade pack, if sold, should be governed by section 4 of Central Excise Act, 1944. Accordingly, the duty is required to be paid on transaction value. Hence, the contention of the department that the valuation should be done pro-rata of MRP based value is not correct. This issue has been considered time and again by this Tribunal and held that in case of Physician samples sold, the valuation should be done on transaction value in terms of Section 4. Accordingly, the demand is not sustainable. Hence, the impugned orders are set aside. Appeals are allowed. The Revenue's appeal is to enhance the penalty invoking section 11AC. Since the demand itself does not sustain, Revenue's appeals does not survive and the same is dismissed. "
From the above judgments it is settled that in case of manufacture and sale of Physician Sample valuation is governed under Section 4 (1)a) of central Excise Act, 1944. Therefore, the issue is no longer res- integra.
Following the above judgments and the discussion made by us herein above, the impugned orders are set aside and appeals are allowed.
(Pronounced in the open court on 08.09.2022 ) RAMESH NAIR MEMBER (JUDICIAL) RAJU MEMBER (TECHNICAL) Geeta