TaxTMI 
TaxTMI 
2024 (3) TMI 689
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....y have cleared physician samples without payment of duty on retail sale price basis but discharged duty on 110% of cost of production. Alleging that the value should be determined in terms of Rule 4 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, differential duty was demanded by issuing show-cause notice periodically for the said period. In the first show-cause notice, extended period of limitation was invoked. On adjudication, the demands were confirmed with interest and penalty. On appeal, the learned Commissioner (Appeals) confirmed the demand for normal period (appeal No.E/1201/2010) with interest and penalty of equivalent amount under Rule 25 of Central Excise Rules, 2002; also the demands for normal period in appeal No. E/1661/2011 and also appeal No. E/3593/2012 involving period October 2007 to April 2010 have been confirmed with interest and penalties. Hence the present appeals. 3. The learned advocate for the appellant has submitted that the appellants are selling physician samples along with trade packs either outright to brand name owners of P&P medicaments or manufactured and cleared on job work basis. It is his contention that i....
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....f Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. In support, he has referred to the following judgments:- i. Medley Pharmaceuticals [2011(263) ELT 641 (SC)] ii. Indian Drug Manufacturers Association [2008(222) ELT 22 (Bom.)] iii. Cadila Pharmaceuticals Ltd. [2008(232) ELT 245 (Tri. LB)] iv. Themis Pharmaceuticals [1998(98) ELT 187 (Tri. Del.)] v. Goa Antibiotics & Pharmaceuticals [2014(314) ELT 546 (Tri. Mum.)] vi. Amazon Drugs Pvt. Ltd. [Final Order No.21191/2023 dt. 30/08/2023 - CESTAT, Bangalore] vii. Elvina Pharmaceuticals Ltd. [Final Order No.21191/2023 dt. 30/08/2023 - CESTAT, Bangalore] viii. Elvina Pharmaceuticals Ltd. [Final order No.21164/2023 dt. 31/10/2023 - CESTAT Bangalore] 5. Heard both sides and perused the records. 6. The short issue involved for consideration is whether the physician samples cleared by the appellant to the principal manufacturer or manufactured and cleared on job work basis to be assessed under Rule 4 read with Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or Rule 8 of the said Rules; wh....
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....r the mandate of Section 4(1)(b) of the Act. There is no dispute between the parties on this score. 23. As mentioned above, Rules 4 to 11 of the Valuation Rules contain provisions as to the manner of determination of values. However, learned advocate for the appellant and learned SDR for the Revenue fairly agreed that none of the rules - from Rule 4 to Rule 10 (Rule 10A was inserted later in 2007) - covers the case of free supply of goods by manufacturers and, therefore, aid has to be taken of the residuary rule i.e.; Rule 11 of the Valuation Rules. Rule 11 lays down: "If the value of any excisable goods cannot be determined by the foregoing rules, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of section 4 of the Act." On a plain reading, it would appear that where the value of any excisable goods cannot be determined under the preceding Rules i.e rules 4 to 11 which are the substantive rules laying down the manner or formula for determination of value, that is, if none of the substantive rule is per se applicable, the value is to be determined as per the princ....
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....le 4 instead of Rule 8 of the 2000 Rules. Earlier, by Circular No. 643, dated 1-7-2002 the Board had held that the valuation be done under rule 11 read with rule 8 of the Rules. 25. The Bombay High Court noticed that prior to 1-7-2000 the concept of valuation of excisable goods was based on the deemed value. The deemed value as per Section 4(1)(a) of the Act, as it stood prior to 1-7-2000, was the normal price at which such goods were ordinarily sold for delivery at the time and place of removal to a buyer who was not a related person and price was the sole consideration. Where, however, the normal price could not be ascertained for the reason that such goods were not similar or for any other reason, the value was to be determined in the manner prescribed - as laid down in Section 4(1)(b). For determining the value of excisable goods under Section 4(1)(b), the Central Government had framed Central Excise (Valuation) Rules, 1975. (I shall refer to the relevant rules a little later.) The concept of valuation underwent a drastic change with the amendment of clause (a) of Section 4(1) with effect from 1-7-2000. The concept of deemed value was done away with and substituted by ....
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.... 30. The fact that medicines/medicaments are specified goods within the meaning of Section 4A of the Act since January, 2005, does not appear to have been brought to the notice of the Bombay High Court but this would hardly make any difference, for, the MRP is to be treated as value of the goods i.e. deemed value in place of the transaction value under Section 4(1)(a) and it does not take the goods out of the pale of Rule 4. Besides, it is to be kept in mind that the Bombay High Court was seized of a legal issue in the context of challenge to the validity of a circular issued on 25-4-2005, that is, in the aftermath of the notification under Section 4A(1). 31. In view of the above discussions, I am of the opinion that notwithstanding the non-availability of the normal sale price under Section 4(1)(a) of the Act, by reason of the goods being specified under Section 4A(1) making the retail sale price i.e. MRP as its deemed value, the appropriate rule governing the valuation of physician's samples would continue to be Rule 4 and the decision of the Larger Bench in Blue Cross Laboratories Ltd.'s case (supra) mutatis mutandis continues to be good law. The reference is a....