Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs Cce Daman on 18 August, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT:
II
Appeal No.E/2833/2006
Arising out of: OIA No.NS/204/Daman/2005, dt.28.4.05
Passed by: Commissioner of Central Excise & Customs (Appeals), Vapi
For approval and signature:
Honble Mrs. Archana Wadhwa, Member (Judicial)
Honble Mr. B.S.V. Murthy, Member (Technical)
1. Whether Press Reporters may be allowed to see the No
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 of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
CCE Daman
Respondent:
M/s Golden Cross Pharma Pvt. Ltd.
Represented by:
None for the Assessee; Shri R.S. Srova, JDR for the Revenue.
CORAM:
MRS. ARCHANA WADHWA, MEMBER (JUDICIAL) MR. B.S.V. MURTHY, MEMBER (TECHNICAL) Date of Hearing/Decision:18.08.10 ORDER No. /WZB/AHD/2010 Per: Mrs. Archana Wadhwa:
Being aggrieved with the order passed by Commissioner (Appeals), Revenue has filed the present appeal. We have heard Shri R.S. Srova, learned JDR for the Revenue. Nobody appeared for the respondents.
2. The dispute in the present appeal relates to the assessable value of physician sample of medicaments cleared by the respondents for free distribution during the period from 1.1.2002 to 31.1.2004. The said sample were cleared by the respondents on payment of duty by arriving at the assessable value on the basis of 115% of the cost of the production.
3. On the other hand, Revenues contention was that the valuation of physician sample has to done on pro-rata basis of comparable price of identical commercial pack being sold by the assessee in the market.
4. Accordingly, proceedings were initiated by way of issuance of show cause notice dt.1.7.04, which culminated into an order passed by the original adjudicating authority, confirming demand of duty of Rs.2,87,977/- and imposing penalty of identical amount. On appeal against the above order, the Commissioner (Appeals) set aside the same by observing as under:
It is seen that the period of clearance of subject goods, viz. physician samples is after July 2000 when provisions of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 was applicable. With reference to certain doubts raised in connection with the said Valuation Rules 2000, the CBEC has given clarification under its Circular No.643/34/2002-CX, dt.1.7.02. Vide Sr.No.13 of the said circular, a clarification with regard to the query as to how will valuation of samples be done which are distributed free, as part of marketing strategy, or as gift or donation, has been given by the CBEC which reads as under:
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, all other rules cover the 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. It has not been mentioned in the circular dt.1.7.02 that the clarification given at Sr.No.13 will not be applicable to valuation of physician samples. Hence, the clarification at Sr.No.13 has to be considered for all categories of samples distributed free, as specified there at Sr.No.13. The physician samples are distributed free to medical practitioners, doctors, clinics and hospitals, who in turn, used such samples to the patients. Therefore, free distribution of physician samples in turn enhances the sale and promotes the business, which forms part of marketing strategy. Accordingly, the guidelines imparted by CBEC vide clarification at Sr.No.13 of its circular dt.1.7.02 are applicable for valuation of physicians samples distributed free as a part of marketing strategy and assessable value would be 115% of the cost of production or manufacture of the goods in question.
As regards lower authorities contention that Rule 8 of Valuation Rules 2000 is applicable only to the goods which are captively used in the manufacture of other articles and therefore it is not applicable to physicians samples, it is pertinent to mention here that the samples distributed free and referred by the CBEC in the circular at Sr.No.13 are also not intended or exclusively to be used for captive consumption, however, inspite of these facts, the CBEC has clarified that provisions of Rule 11 read with Rule 8 of Valuation Rules 2000 would apply in the case of samples distributed free.
Although the decisions referred by the lower authority in impugned orders and various decisions cited by the appellants are related to valuation of physician sample packs, none of these gives any ruling in connection with CBEC circular dt.1.7.02. CBEC circulars are binding on Revenue authorities, even if they are contrary to law as held by Supreme Court in the case of Dhiren Chemical Industries 2002 (139) ELT 3 (SC) and 2002 (143) ELT 19 (SC). As such, the adjudicating authority was required to follow the directions given in CBEC circular dt.1.7.02. He set aside the impugned order and allowed the appeal. Hence, the present appeal by the Revenue.
5. Though we find that the issue of assessable value of physicians samples stand decided by the Larger Bench decision in the case of Cadila Pharmaceuticals Ltd. as reported in 2008 (232) ELT 245 (Tri-LB) against the assessee, the Tribunal in number of cases subsequently decided has held that inasmuch the assessees were paying duty in terms of circular issued by Board, the demand cannot be sustained against assessee. Reference in this regard is made to one such decision in the case of Marsha Pharma Ltd. 2009 (248) ELT 687 (Ahm.)
6. We do not find any reason to take a view contrary to the one taken by the Commissioner (Appeals). Admittedly, all the assessees similarly situate, were paying duty on the physicians samples during the relevant period, on the basis of 115% of the cost of production. Tribunal in all such matters held that the circular would be binding on the Excise authorities and contrary view cannot be taken so as to confirm the demand by invoking longer period of limitation.
7. In view of the above observations, the appeal filed by the Revenue is rejected.
(Pronounced in Court)
(B.S.V. Murthy) (Archana Wadhwa)
Member (Technical) Member (Judicial)
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