Custom, Excise & Service Tax Tribunal
Commissioner Of Central ... vs Samudrabiopharmapvt. Ltd on 9 January, 2018
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNALSOUTH ZONAL BENCH CHENNAI Appeal No.E/496/2008 [Arising out of Order-in-Appeal No.09/2008 dt.27.8.2008 passed by the Commissioner ofCentral Excise (Appeals), Madurai] Commissioner of Central Excise,Tirunelveli Appellant Versus SamudraBiopharmaPvt. Ltd Respondent
Appearance:
ShriB.Balamurugan, AC (AR) For the Appellant None For the Respondent CORAM :
HonbleMs.SulekhaBeevi C.S. Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of hearing : 4.1.2018 Date of Pronouncement : 9.1.2018 Per Bench FINAL ORDER No. 40075 / 2018 Brief facts are that respondents are engaged in manufacture of interalia, provitamin capsules and are registered with Central Excise Department. They cleared the goods to various traders who in turn sell them in retail. They are discharging duty on MRP basis less abatement, under Section 4A of Central Excise Act, 1944 read with Notification No.2/2005 CE dt.7.1.2005. Respondents also cleared provitamin capsules as physician samples and paid duty under Section 4 of Central Excise Act, 1944 which was less than the MRP value. The department was of the view that respondents adopted less value to clear provitamin capsules in the guise of samples, and therefore are liable to pay duty on these samples on the basis of MRP less abatement. Show Cause Notice was issued raising the above allegation and proposing to recover the differential duty alongwith interest and for imposing penalties. After due process of law, original authority, confirmed demand, interest and imposed equal penalty. In appeal, the Commissioner (Appeals) set aside the same. Hence this appeal.
2. On behalf of department, the Ld. AR, Shri R.Subramanian, reiterated the grounds of appeal. The respondents cleared the goods to traders, who in turn sell them in retail. The products are in retail packs on which MRP is printed and they discharged duty on MRP basis deducting abatement. Respondents were clearing huge quantity of the product as samples to these pharmaceutical companies which were meant for supply free of cost to physicians. That respondent was clearing abnormally huge quantities as physicians samples by adopting lesser value. The clearances of samples constituted roughly one fourth of the total clearances to the extent that every fourth invoice is a sample. That respondent was thus clearing the products at a lesser value in the guise of physician samples, in order to evade duty. That free samples are to be valued under 4 (1)(b) of Central Excise Act read with Valuation Rules, 2000. The original authority had rightly confirmed the demand, whereas the Commissioner (Appeals) has erred in setting aside the demand observing that there is no evidence that goods were cleared in the guise of samples with intend to evade duty.
3. None appeared for respondent though repeated notices were issued. The appeal was taken up for disposal after hearing the AR, and perusal of records.
4. The main allegation of the department is that respondents have cleared huge quantities of products under the guise of physician samples and that therefore these samples have to be valued under MRP basis for discharge of duty. The Commissioner (Appeals) in para 6.1 of impugned order has discussed this aspect in detail. He observes that apart from a blank statement that goods are cleared in guise of physician samples there is no positive evidence about the camouflaged clearances of provitamin capsules. On perusal of records this observation is not without basis. The department has not conducted any investigation at the end of the traders whether the goods cleared as samples where distributed as samples only or whether they were sold in retail. It is pertinent to note that respondents have consistently explained that the physician sample package were marked as physician sample Not for sale. The Show Cause Notice as well as the original authority has proceeded on the premise that it is not legal to have different prices for the same goods. When the samples are not intended for sale, the value need not be on the basis of MRP as in the case of products which are sold. The position regarding the valuation of goods sold as physician samples is now settled by the decisions in the following cases.
i. ZYGPharma Pvt Ltd vs. CCE, Indore (348) ELT 389 (Tri.-Del.
2017)
ii.a. CCE, VapivsSun Pharmaceutical Ltd 2017 (350) ELT 289
(Tri.-Ahmd.)
b. CCE, Sun Pharmaceutical Ltd 2017 (350) ELT A61
(S.C.)
5. Following the above decisions we find that Commissioner (Appeals) has correctly appreciated the facts and also applied the correct law. We do not find any grounds to interfere in the impugned order. The appeal filed by department is dismissed.
(Order pronounced in open courton 9.1.2018) (Madhu Mohan Damodhar) (SulekhaBeevi C.S) Member (Technical) Member (Judicial) Vsr/Rkp 4 1