Custom, Excise & Service Tax Tribunal
(India) Pvt. Ltd vs C.C.E.- Jaipur on 12 May, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLAT TRIBUNAL WEST BLOCK NO. 2, R.K. PURAM, NEW DELHI-110066 COURT NO .IV Date of hearing: 12/05/2016 Appeal No. E/84/2007-EX[DB] [Arising out of Order-in-Original No. 234 (GRM)CE/JPR-I/2006 dated 27.09.2006 passed by the Commissioner (Appeal-I) Central Excise and Customs, Jaipur] For Approval & Signature of: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether their Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes M/s. Bausch & Lomb Eyecare (India) Pvt. Ltd. Appellant Vs. C.C.E.- Jaipur Respondent
Appearance: Shri B.L. Narsimhan, Advocate for the Appellant Shri R.K. Mishra, DR for the respondent.
Coram: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No. 51832/2016 Per: Archana Wadhwa M/s. Bausch & Lomb Eyecare (India) Pvt. Ltd. SP-810-811-A, RIICO Industrial Area, Bhiwadi (hereinafter referred to as the appellants) are engaged in the manufacture of Lens Care Solution falling under Tariff Item No. 3307 9020 of the First Schedule to the Central Excise Tariff Act, 1985. The appellants clear the final products manufactured by them on payment of appropriate duty of excise leviable thereon.
2. During the period February, 2005 to July, 2005, the appellants were selling sample packs of 60ml bottles of ReNu Lens Care Solution at a price of Re 1/- to distributors as a means of marketing strategy to promote sales of the product. These bottles were sold to their various distributors (hereinafter referred to as the Distributor). The appellants were selling these samples at a price of Re. 1/- to the Distributor and the Distributor in turn was distributing these goods as a free sample to the customers to promote its own sales.
3. The distributor was giving the samples of 60 ml bottle as a part of Welcome Kit where the Welcome Kit also comprised of lens case & instruction kit and the Welcome Kit was given along with trial lenses to the customer. These activities were undertaken by the dealer for the purpose of sales promotion. The Distributor was not charging any consideration for the samples supplied by it to the customers along with Welcome Kit.
4. At the time of clearance of the aforesaid product to the Distributor, the appellants were paying excise duty based on Re. 1/- which was the price charged by them from the Distributor as the price of Re. 1/- represented transaction value between the appellants and the Distributor. As per appellant that 60 ml pack of Lens Care Solution was never supplied by them as such for sale in retail to the retail customers and that 60 ml pack of Lens Care Solution was only sold to distributor for his sales promotion.
5. The departmental authorities objected to the payment of excise duty based on Re. 1/- in respect of 60 ml pack of Lens Care Solution. The appellants started paying excise duty on the sample bottles under Rule 8 of the Valuation Rules, i.e., cost of production plus 10% under protest. In this regard, the appellants wrote a letter dated 30th August, 2005 to the Excise Department. The appellants also wrote letter dated 29th September, 2005 to the Excise Department vide which they clearly explained as to how the goods have to be valued under Section 4 of the Central Excise Act, 1994 only. During the period, i.e., February 2005 to July 2005, the appellants have paid total duty of Rs. 16,34,844/- based on Rule 8 of the Valuation Rules, i.e., cost of production plus 10%.
6. In the above background, show cause notice dated 3rd February, 2006 was issued to the appellants contending that the bottles of Lens Care Solution cleared by the appellants were required to be valued based on the price of comparable goods, i.e., half of the price of 120 ml bottles meant for retail sale. The show cause notice adopted Rs. 43.50 per pack as the assessable value of 60 ml Lens Care Solution and demanded excise duty of Rs. 25,67,845/- for the period February, 2005 to July 2005. Show cause notice proposed to appropriate excise duty of Rs. 16,34,844/- already deposited by the Appellants. The show cause notice also proposed for recovery of interest as also imposition of penalty on the appellants.
7. The Additional Commissioner of Central Excise passed Order-in-Original dated 28.04.2006 vide which he adjudicated the aforesaid Show Cause Notice. Additional Commissioner confirmed entire duty demand of Rs. 25,67,845/- against the appellants along with interest. Additional Commissioner also imposed penalty of Rs. 5,00,000/- on the appellants.
8. Aggrieved by the Order-in-Original dated 28.04.2006 passed by the Additional Commissioner of Central Excise, Jaipur-I, the appellants filed an appeal before the Commissioner of Central Excise (Appeals), Jaipur.
9. The Commissioner of Central Excise (Appeals) has passed the impugned Order-in-Appeal dated 27.09.2006 vide which he has rejected the appeal filed by the appellants.
Hence the present appeal.
10. After hearing both the sides, we find that short question required to be decided in the present appeal is as to whether the value of Re. 1/- adopted by the appellant in respect of the small bottles of 60 ml of Lens Care Solution is the correct assessable or the value has to be raised, by adopting the value of the full commercial bottle of 120 ml. We note that an identical issue was considered by the Tribunal in the case of Sun Pharmaceutical Industries Versus Commissioner of C. Ex., Surat-II reported in 2005 (183) E.L.T. 42 (Tri.- Mumbai) and it was held that inasmuch as the smaller packs were being sold by the assessee, though they were meant for further free distribution by the distributors, the price at which the same were being sold represents the transaction value and is required to be adopted as the assessable value in terms of the provisions of Section 4. We further find that on appeal against the said decision by the Revenue, the Honble Supreme Court in the case of Commissioner of Central Ex. & Cus, Surat Versus Sun Pharmaceuticals Inds. Ltd. reported in 2015 (326) E.L.T 3 (S.C.) observed that in the absence of any allegation made by the Revenue that the price at which the samples meant for free distribution were being sold by the assessee to distributors was not the sole consideration, such consideration fulfills the requirement of Section 4 (1)(a) of Central Excise Act, 1944. The fact that physician samples were further given free of cost by the distributors as no price was charged by the distributors, the case cannot be held to be not covered by the provisions of Section 4 (1) (a) of the Act. The said argument of the Revenue would be fallacious and wrong reason. The transaction is between the assessee and their distributors at the price charged by the assessee from the distributors and what the distributors ultimately did with these goods is extraneous and cannot be the relevant consideration to determine the valuation of the excisable goods.
11. In the present case also, we find that the Revenues entire case for enhancement of the price is based upon the fact that the distributors were giving the said packs free of cost, as a promotional scheme. Revenue has otherwise not doubted the fact that the consideration received by the assessee from the distributor is not the consideration or something more has flown back. In the absence of any such allegation much less any evidence, the ratio of law declared by the Honble Supreme Court is fully applicable.
12. In view of the foregoing, we set aside the impugned order and allow the appeal with consequential relief to the appellant.
(Archana Wadhwa) Member (Judicial) (B. Ravichandran) Member (Technical) Ritu 2