Tribunal Upholds Rule 8 for Pharmaceutical Sample Valuation, Grants Waiver & Recovery Stay

GENO PHARMACEUTICALS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, GOA

GENO PHARMACEUTICALS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, GOA - 2004 (166) E.L.T. 415 (Tri. - Mumbai) Issues:
Waiver of deposit of duty and penalty on pharmaceutical samples due to underdeclaration of value.

Analysis:
The case involves an application for the waiver of a duty deposit and penalty amounting to Rs. 3,41,971/- and Rs. 1 lakh, respectively, concerning the clearance of pharmaceutical samples. The dispute arises from the underdeclaration of the value of the samples for assessment purposes, with the department contending that the assessable value should be 115% of the cost of manufacture as per Rule 8 of the Valuation Rules, 2000. The applicant, however, valued the samples based on their cost of manufacture, arguing that the actual cost should apply, as none of the Valuation Rules specifically address goods that are cleared but not sold. The tribunal notes that Rule 8 pertains to goods not sold but captively consumed, while Rule 11 allows for valuation using reasonable means consistent with the Act's provisions. The tribunal considers two alternatives: valuation based on identical goods cleared for home consumption or Rule 8 application. The applicant concedes that the former method would result in a higher value, leading the tribunal to uphold the application of Rule 8. Consequently, the applicant is directed to deposit Rs. 3.20 lakhs within two months, following which the waiver of the remaining duty and penalty amount is granted, with recovery stayed.

The tribunal's decision highlights the interpretation of valuation rules in cases where goods are cleared but not sold, emphasizing the application of Rule 8 for assessable value determination. The analysis underscores the importance of consistency with statutory provisions and general principles in valuation matters, ultimately leading to the directive for the applicant to make a specified deposit to secure the waiver of the outstanding duty and penalty amounts. The judgment serves as a precedent for similar cases involving valuation disputes and underscores the tribunal's adherence to legal principles and rules in resolving such matters. Compliance with the tribunal's directive within the stipulated timeline is crucial to availing the benefit of the waiver and stay on recovery, emphasizing the significance of timely and accurate financial obligations in customs and excise matters.