2019 (10) TMI 810 - AT - Central Excise

Valuation - retail sale - supplies of pharmaceuticals made for institutional buyers who are running hospitals and where the pharmaceuticals are intended for consumption in the hospitals and not for retail sale - Applicability of assessment under section 4A of the Central Excise Act, 1944 - HELD THAT - There is no merit in Revenue s allegation that such medicaments which are intended for consumption by the institutional buyers and not intended for retail sale are liable to be assessed under section 4A. Appeal dismissed.

Summary

Issues Involved:
1. Applicability of assessment under section 4A of the Central Excise Act, 1944, for supplies of pharmaceuticals to institutional buyers.
2. Validity of Revenue's appeal against the earlier Order-in-Original (OIO).

Issue-wise Detailed Analysis:

1. Applicability of Assessment Under Section 4A of the Central Excise Act, 1944:

The primary issue in this case revolves around whether pharmaceuticals supplied to institutional buyers, such as hospitals, are subject to assessment under section 4A of the Central Excise Act, 1944. The appellant argued that their clearances to institutional buyers are intended for consumption in hospitals and not for retail sale. This distinction is crucial because section 4A pertains to goods intended for retail sale, which necessitates the printing of retail sale prices (RSP) on the products.

The Tribunal had previously remanded the matter back to the original adjudicating authority with instructions to obtain necessary clarification from the State Drug Controller Authorities regarding the requirement of printing RSP on medicaments cleared to hospitals and institutional buyers. The appellant produced certificates from various institutional buyers confirming that the pharmaceuticals purchased were for consumption in their hospitals and not for retail sale. Additionally, contracts often required the appellants to print "not for sale" on the packages.

The Tribunal referenced a similar case, USV Ltd. 2019-VIL-268-CESTAT-Ahm-CE, where it was held that supplies intended for consumption by institutional buyers in their own hospitals and not intended for retail sale are not liable to be assessed under section 4A. The Tribunal emphasized that the requirement of printing MRP is applicable only to products "offered for retail sale," as mandated by the Drugs (Price Control) Order, 1995. Since the pharmaceuticals in question were not offered for retail sale, the provisions of Rule 14 and 15 of the DPCO, 1995, were not applicable.

The Tribunal concluded that the Revenue had not produced any evidence to show that the goods supplied to institutional buyers were sold in retail. Therefore, the demand for assessment under section 4A could not be upheld.

2. Validity of Revenue's Appeal Against the Earlier Order-in-Original (OIO):

The appellant pointed out that the Tribunal's previous order failed to consider the Revenue's appeal No. E/778/2011 against the earlier OIO. Since the matter was remanded, the said appeal became infructuous. The Tribunal dismissed the Revenue's appeal as infructuous, as it was filed against an order that had already been remanded for re-adjudication.

Conclusion:

The Tribunal found no merit in the Revenue's allegation that pharmaceuticals intended for consumption by institutional buyers and not intended for retail sale should be assessed under section 4A. Consequently, the appeals filed by the appellant were allowed, and the Revenue's appeal was dismissed as infructuous. The operative part of the order was pronounced in the open court.