2013 (5) TMI 800 - AT - Central Excise

Tribunal Upholds Revenue's MRP-Based Valuation for Physician Samples

The Tribunal upheld the Revenue's contention that the value for assessment of physician samples should be based on the MRP of trade packs under Section ... Demand of differential duty - Valuation u/s 4A - value for the purpose of assessment of physician samples should be arrived on the basis of MRP of trade packs - Held that:- Appellant has not been able to make any case on merits. Accordingly, we direct the appellant to deposit the entire amount of differential duty demanded. At this stage, the learned advocate pointed out that the appellant has pleaded financial difficulty and the appellants have been making loss during the past period and relies on the balance sheet. However on going through the balance sheet, we find that the appellant’s financial position has been improving marginally and further, appellants also have got bank balance and investments, etc. Further it is also seen that they are not making cash losses. In these circumstances, we do not find that the financial difficulties to be so severe that the appellant cannot deposit the differential duty demanded. However, having regard to the claim of financial difficulty and the arguments advanced by the appellant, we consider their request for extended time limit for payment of differential duty favourably and direct the appellant to pre-deposit the differential duty within twelve weeks - Partial stay granted. Issues: Determination of value for assessment of physician samples based on Central Excise Valuation Rules.Analysis:1. The appellant, engaged in manufacturing P & P medicaments on job work basis, cleared physician samples by adopting value based on CAS4 (cost of production + 10%). Revenue contended that value should be determined based on MRP of trade packs as P&P medicaments are notified under Section 4A. Show cause notices were issued, leading to confirmation of differential duty and imposition of penalty equal to the duty.2. The appellant argued that physician samples were not sold, and value should be determined under Rule 8 of the Central Excise Valuation Rules. Citing a Tribunal decision, the appellant claimed that value should be based on cost of production + 10% under similar circumstances.3. The Tribunal considered the submissions and noted that the earlier Tribunal decision relied upon was rendered before the introduction of Rule 10A in the Central Excise Valuation Rules. Rule 10A provides principles for determining value when goods are manufactured on a job work basis. If Rule 10A is applied, value should be based on what would have been arrived at if the goods were manufactured by the principal manufacturer himself, using MRP as a basis.4. The Tribunal found that the appellant failed to make a case on merits. Despite the appellant's plea of financial difficulty, the Tribunal observed marginal improvement in the appellant's financial position and the availability of bank balance and investments. Considering the financial difficulties claimed, the Tribunal allowed an extended time limit of twelve weeks for the appellant to pre-deposit the differential duty. Pre-deposit of the entire amount waived the requirement for pre-deposit of interest and penalty, with a stay against recovery during the appeal's pendency granted.