Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

Comments

Print   |    |  Comment

PJ/CASE LAW/2016-17/3156

Valuation of physician samples distributed as free of cost.


Case:-EMIL PHARMACEUTICAL INDUSTRIES P. LTD. VERSUS COMMR. OF C. EX., THANE-II
 
Citation:-2016 (334) E.L.T. 143 (Tri. Mumbai)

Brief Facts:-The period involved in all the five cases is from 1-4-2005 onwards when MRP based assessment was introduced in respect of P & P Medicaments. The issue is whether such samples should be assessed to duty as per Section 4(1) (a) or Section 4A.
 
Common issue is involved, therefore all the five appeals have been taken up together. Two appeals have been filed by the appellant M/s. Emil Pharmaceutical Ind. Pvt. Ltd. against the confirmation of the demand. Two other appeals have been filed by the Revenue against dropping of demand. Fifth appeals is Revenue’s appeal relating to M/s. Medibious Laboratories Pvt. Ltd. against dropping of demand.
 
The issue involved in all the five appeals is the valuation of physician samples manufactured by the assessees and sold to the brand name holder (other pharmaceutical companies) on principal to principal basis, who in turn distributes the same free of cost to various doctors/physician. In all the cases, respective assessees have manufactured the said goods using their own raw material, packing material, machinery etc. The period involved in all the five cases is from 1-4-2005 onwards when MRP based assessment was introduced in respect of P & P Medicaments. The issue is whether such samples should be assessed to duty as per Section 4(1) (a) or Section 4A.
 
Appellant’s Contention:- - Clearance of physician’s samples by manufacturer of P&P Medicaments to other principal manufacturers for free distribution. Since physician’s samples are not intended for sale, no legal requirement of indicating retail sale price. As held in various judgments of Tribunal, physician’s samples manufactured on principal to principal basis required to be assessed under Section 4(1)(a) of Central Excise Act, 1944 and not under MRP/RSP provisions - Section 4 of Central Excise Act, 1944.
 
Respondent’s Contention:-The respondent reiterated the findings of the lower authorities.
 
Reasoning Of Judgment: We find, the said issue is covered by the Tribunal judgment in the case of M/s. Gelnova Laboratories (I) Pvt. Ltd. v. Commissioner of Central Excise, Belapur vide Order Nos. A/948-951/2013/EB/C-II, dated 28-10-2013 [2014 (300) E.L.T. 437 (Tribunal)].
 
The provisions of Notification issued in this regard is also worth noting:-
 
“Medicaments - Assessments on basis of retail sale price (MRP)
 
In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 4A of the Central Excise Act,1944 (1 of 1944), the Central Government hereby specifies the goods mentioned in column (3) of the Table below and falling under Chapter or Heading No. or sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) mentioned in the corresponding entry in column (2) of the said Table, as the goods to which the provisions of the said sub-section (2) shall apply, and allows as abatement the percentage of retail sale price mentioned in the corresponding entry in column (4) of the said Table :-
 
 

S. No. Chapter or Heading No. or sub-heading No. Description Abatement as a percentage of retail sale price
(1) (2) (3) (4)
1. 3003. 10 Patent or proprietary medicaments, other than those medicaments which are exclusively Ayurvedic, Unani, Siddha, Homoeopathic or Bio-chemic 35%
2. 3003. 20 Medicaments (other than patent or proprietary) other than those which are exclusively used in Ayurvedic, Unani, Siddha, Homoeopathic or Bio-chemic systems 35%

 
This notification shall come into force on the 8th day of January, 2005.
 
Explanation. - For the purposes of this notification, “retail sale price” means the retail price displayed by the manufacturer under the provisions of the Drugs (Price Control) Order, 1995.”
 
We also note that Durg (Price Control) Order, 1995 in paragraph 7 specifies how the retail price of formulation is to be determined. Further paragraph 8 of the said order empowers the Government to fix the retail price of a scheduled formulation in accordance with paragraph 7. Further paragraph 9 of the said order empowers Government to fix ceiling price of scheduled formulations. Further paragraph 14 provides for carrying into effect the price fixed or revised by the Government, its display and proof thereof. Sub-paragraph (2) of the said paragraph reads as under :-
 
Carrying into effect the price fixed or revised by the Government, its display and proof thereof :
 
Every manufacturer, importer or distributor of a formulation intended for sale shall display in indelible print mark, on the label of container of the formulation and the minimum pack thereof offered for retail sale, the retail price of that formulation, notified in the Official Gazette or ordered by the Government in this behalf, with the words ‘retail price not to exceed’ preceding it, and “local taxes extra” succeeding it, in the case of Scheduled formulations.
 
Provided that in the case of a container consisting of smaller saleable packs, the retail price of such smaller pack shall also be displayed on the label of each smaller pack and such price shall not be more than the pro rata retail price of the main pack rounded off to the nearest paisa.”
 
From the above, it is clear that requirement of displaying the retail price is only for the goods intended for sale. Since, physician samples are not intended for sale, requirement to indicate the retail sale price does not exist, in the law. We also note that this Tribunal has been taking a view that physician samples manufactured on principal to principal basis are required to be assessed under Section 4(1)(a) of the Central Excise Act as is evident from the various case laws quoted by ld. Counsel for the appellant.
 
In view of the above findings, the appeal is allowed.
 
 
Decision:-Appeal allowed.
 
Comment:-  The gist of the case is that since physician samples are not intended for sale, requirement to indicate retail sale price does not exist and consequently, the provisions of MRP based valuation as contained in section 4A of the Central Excise Act, 1944 is not applicable. Hence, the valuation of physician samples is to be done under section 4 of the Central Excise Act, 1944.
 
 
Prepared By: - Alakh Bhandari
 
 
 
 
 
 
 
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com