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2019 (5) TMI 507 - AT - Central ExciseMethod of valuation - Clearance made to institutional buyers - Section 4 or 4A of CEA - Revenue under the belief that the supplies to the institutional buyers should also be valued in terms of section 4A of the Central Excise Act, 1944 issued SCN demanding duty - N/N. 2/2005-CE(NT) dated 07.01.2005. HELD THAT - It is seen that investigations were extended to various customers/ dealers and in para 9 of the impugned order the list of customers has been enumerated. The gist of the investigation is reproduced in para 10, 11, 12 and 13 of the impugned order. The investigations confirmed that no evidence of printing of MRP on institutional supplies made through dealers was found. In fact whatever evidence was produced showed that the products contained the marking hospital supply-not for sale only - It is apparent that what is covered in DPCO is only the items which are sold in retail. If a container is sold in retail, the container must contain retail sale price and if the content of such container are also sold in retail then each such pack sold in retail must have the MRP printed on it. From above it is apparent that the provisions are attracted only on goods offered for retail sale . In the impugned order, it is seen that the words offered for retail sale appearing in DPCO 1995 have been overlooked. In the instant case the evidence brought on record does not dispute the claim that the goods sold to institutional buyers were not sold (or offered for sale) in retail sale - The provisions of para 14 and 15 of DPCO 1995 are not attracted in respect of sales to institutional buyers which are not further offered for retail sale. The demand, therefore, cannot be upheld - penalties set aside. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Applicability of Section 4A of the Central Excise Act, 1944 for valuation of medicaments supplied to institutional buyers. 2. Requirement of printing Maximum Retail Price (MRP) on medicaments supplied to institutional buyers. 3. Invocation of extended period of limitation. 4. Imposition of penalties under Rule 25(1) of the Central Excise Rules, 2002 and Section 11AC of the Central Excise Act, 1944. Detailed Analysis: 1. Applicability of Section 4A of the Central Excise Act, 1944: The primary issue was whether the supplies of medicaments to institutional buyers should be valued under Section 4A of the Central Excise Act, 1944, which pertains to valuation based on the Maximum Retail Price (MRP). The appellants argued that their products supplied to institutional buyers did not have MRP printed as they were not intended for retail sale. They contended that Section 4A applies only when there is a mandatory requirement to affix MRP, which was not the case here. The Tribunal examined the notification No. 2/2005-CE(NT) and the provisions of the Drug (Price Control) Order 1995, concluding that the requirement of printing MRP applies only to products offered for retail sale. Since the goods supplied to institutional buyers were not intended for retail sale, Section 4A was not applicable. 2. Requirement of Printing MRP: The Tribunal scrutinized the Drug (Price Control) Order 1995, particularly paragraphs 14(2) and 15(1), which mandate printing MRP on products intended for retail sale. The investigation confirmed that the supplies to institutional buyers did not have MRP printed and were marked "hospital supply-not for sale." The Tribunal held that the provisions of DPCO 1995 are applicable only to goods offered for retail sale, and since the goods in question were not offered for retail sale, there was no requirement to print MRP. The Tribunal dismissed the Revenue's argument that the initial sale to dealers/distributors necessitated MRP printing, emphasizing that the DPCO 1995 provisions apply only to retail sales. 3. Invocation of Extended Period of Limitation: The appellants argued that the extended period of limitation could not be invoked as the dispute was a matter of interpretation with no malafide intent. The Tribunal did not explicitly address this issue in detail but implicitly accepted the appellants' argument by allowing their appeals and setting aside the demands and penalties. 4. Imposition of Penalties: The Revenue appealed against the extension of the benefit of 25% penalty under Section 11AC, arguing that penalties were imposed under Rule 25(1) of the Central Excise Rules, 2002, and not under Section 11AC. The Tribunal, however, set aside the penalties imposed on the appellants, including the individuals, as the primary demand itself was not upheld. Consequently, the Tribunal also dismissed the Revenue's appeal regarding the penalties. Conclusion: The Tribunal allowed the appeals of M/s USV Ltd. and the individuals, setting aside the demand and penalties. It held that Section 4A of the Central Excise Act, 1944, and the provisions of the Drug (Price Control) Order 1995 regarding MRP printing were not applicable to supplies made to institutional buyers, as these were not intended for retail sale. The Revenue's appeal was dismissed, and the order was pronounced in the open court on 06.05.2019.
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