Medicaments supplied to institutions without retail price should be valued under Section 4, not Section 4A of Central Excise Act

CESTAT Ahmedabad held that medicaments supplied to institutions without retail sale price affixed should be valued under Section 4 of Central Excise Act, 1944, not Section 4A. The Tribunal distinguished between retail sales (Section 4A) and institutional supplies (Section 4), following precedent in USV Ltd. case. Demand for differential duty was rejected. Regarding cenvat credit on control samples, while duty payment was upheld as appellant did not contest merit, corresponding penalty was set aside considering the debatable nature of the issue. Appeal allowed with modifications.

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Issues Involved:
1. Whether the valuation of medicaments supplied to institutions should be done u/s 4 or u/s 4A of the Central Excise Act, 1944.
2. Demand of CENVAT credit on removal and retention of control samples.

Summary:

Issue 1: Valuation of Medicaments Supplied to Institutions

The primary issue is whether the appellant is liable to pay excise duty on medicaments supplied to institutions under Section 4 or Section 4A of the Central Excise Act, 1944. The appellant argued that supplies to institutions like hospitals are not retail sales and thus should be valued under Section 4, not Section 4A. The Tribunal found that this issue is no longer res integra, citing various judgments, including USV Ltd., Medley Pharmaceuticals Ltd., Zydus Healthcare Ltd., and JB Chemicals & Pharmaceuticals Ltd., which consistently held that medicaments supplied to institutions should be valued u/s 4. The Tribunal concluded that since the supplies are not for retail sale, the valuation should be done under Section 4, not Section 4A. Consequently, the impugned orders were set aside, and the appeals were allowed.

Issue 2: Demand of CENVAT Credit on Control Samples

The appellant did not contest the duty demand on control samples but requested the penalty be set aside due to divergent views on the issue. The Tribunal agreed, noting that the issue is debatable. Therefore, while maintaining the payment of duty on control samples, the penalty was set aside.

Considering the settled legal position, the Tribunal modified the impugned orders accordingly and allowed the appeals. (Pronounced in the open court on 03.06.2024)

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