2023 (1) TMI 588 - AT - Central Excise

Valuation of medicaments for government hospitals under Central Excise Act

JB Chemicals & Pharmaceuticals Ltd, Parmeshwar B Bang Versus C.C.E. & S.T. -Daman

JB Chemicals & Pharmaceuticals Ltd, Parmeshwar B Bang Versus C.C.E. & S.T. -Daman - TMI Issues Involved:1. Applicability of Valuation Provisions under Section 4 or Section 4A of the Central Excise Act, 1944 for medicaments supplied to government institutions and marked as 'NOT FOR SALE'.Issue-Wise Detailed Analysis:1. Applicability of Valuation Provisions under Section 4 or Section 4A of the Central Excise Act, 1944:The core issue in this case was to determine whether the supply of medicaments to government institutions such as BHEL, Railways, and Government Hospitals, where the packages are marked 'NOT FOR SALE' and no retail price is printed, should be governed by the valuation provisions of Section 4 or Section 4A of the Central Excise Act, 1944.The appellant's counsel argued that based on various tribunal decisions, when supplies are made to institutions and the packages are marked 'NOT FOR SALE' with no retail price printed, the valuation should be governed by Section 4 and not Section 4A. The counsel cited several decisions to support this argument, including:- Zydus Healthcare Ltd. (2022 and 2019)- USV Ltd. (2019)- Biochem Pharmaceutical Industries (2017)- J B Chemicals & Pharmaceuticals Ltd. (2019)On the other hand, the respondent's representative reiterated the findings of the impugned order and relied on the Supreme Court judgment in the case of M/s. Jayanti Food Processing (P) Ltd. (2007).Upon careful consideration, the tribunal found that the facts were undisputed: the medicaments were supplied to institutions such as BHEL, Railways, and government hospitals, and the packages were marked 'NOT FOR SALE' without any MRP printed. The tribunal referenced its previous decision in the case of Medley Pharmaceuticals Ltd. (2022), which had considered similar facts and concluded that the valuation of such goods should be governed by Section 4 and not Section 4A.The tribunal emphasized that in cases where medicaments are supplied to government hospitals and institutional buyers and are not sold in retail, the retail sale price need not be affixed. Consequently, the valuation of these goods cannot be insisted upon under Section 4A of the Central Excise Act, 1944. The tribunal cited the decision in the case of Zydus Healthcare Ltd., which had considered the decision in USV Ltd., and reiterated that the provisions of Rule 14 and 15 of the Drugs (Price Control) Order, 1995, which mandate the printing of MRP, apply only to products offered for retail sale.The tribunal noted that investigations had confirmed no evidence of printing MRP on institutional supplies and that the products contained the marking 'hospital supply-not for sale'. The tribunal concluded that the provisions of the Drugs (Price Control) Order, 1995, are not attracted in respect of sales to institutional buyers, which are not offered for retail sale.In conclusion, the tribunal held that the valuation of medicaments supplied to government hospitals and institutional buyers should be governed by Section 4 and not Section 4A of the Central Excise Act, 1944. The tribunal set aside the impugned orders and allowed the appeals, stating that the issue was no longer res integra.Final Judgment:The tribunal concluded that the valuation of medicaments supplied to government hospitals and institutional buyers should be governed by Section 4 of the Central Excise Act, 1944, and not Section 4A. The impugned orders were set aside, and the appeals were allowed.