Amazon Drugs Pvt Ltd Vs Commissioner of Central Excise (CESTAT Bangalore)
CESTAT Bangalore held that value of free physician samples should be done as per rule 4 of the Central Excise Valuation Rules, 2000. Valuation under rule 8 of the 2000 Rules by adding 15% profit to the cost of manufacture not acceptable.
Facts- The appellant is a manufacturer of P or P Medicines and the valuation of the goods manufactured by the appellant is undertaken with reference to the retail sale price u/s. 4A of the Central Excise Act, 1944 w.e.f. 07.01.2005.
The department noticed that during the period from 25.04.2005 to 31.03.2007 the appellant cleared the physician samples by taking the assessable value as 115% / 110% of the cost of production of such goods by applying rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000 and the Board Circular dated 01.07.2002. The department believed that as per the Circular dated 25.04.2005 issued by the Board, the value of free samples should be determined under rule 4 of the 2000 Rules and, therefore, the value of the free samples has to be at par with the value of the goods u/s. 4A of the Excise Act.
Accordingly, a show cause notice dated 30.11.2007 was issued to the appellant to show cause as to why central excise duty amounting to Rs. 81, 523/- may not be demanded from the appellant under section 11A(1) of the Excise Act with interest and penalty. The Assistant Commissioner confirmed the demand of duty. Commissioner (A) upheld the same.
Conclusion- Supreme Court in the case of Medley Pharmaceuticals has held that physician samples have to be valued on pro-rata basis for the relevant period.
Held In the present appeal, the appellant has also determined the valuation under rule 8 of the 2000 Rules by adding 15% profit to the cost of manufacture. Such a determination of the assessable value has not been accepted by the Supreme Court. The Commissioner (Appeals), therefore, committed no illegality.
FULL TEXT OF THE CESTAT BANGALORE ORDER
M/s. Amazon Drugs Pvt. Ltd., Bangalore 1 has filed this appeal to assail the order dated 22.04.2010 passed by the Commissioner (Appeals) by which the order dated 31.12.2008 passed by the Assistant Commissioner has been upheld and the appeal has been dismissed.
2. The appellant is a manufacturer of P or P Medicines and the valuation of the goods manufactured by the appellant is undertaken with reference to the retail sale price under section 4A of the Central Excise Act, 19442 w.e.f. 07.01.2005.
3. The department noticed that during the period from 25.04.2005 to 31.03.2007 the appellant cleared the physician samples by taking the assessable value as 115% / 110% of the cost of production of such goods by applying rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 20003 and the Board Circular dated 01.07.2002. The department believed that as per the Circular dated 25.04.2005 issued by the Board, the value of free samples should be determined under rule 4 of the 2000 Rules and, therefore, the value of the free samples has to be at par with the value of the goods under section 4A of the Excise Act. The following chart shows the differential duty that the appellant would have to pay:
