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2022 (11) TMI 41 - AT - Central ExciseRecovery of short paid duty - supplies to Government Hospitals and Institutional Buyers - method of valuation - to be valued under Section 4 of the Central Excise Rules, 2002 or under Section 4A of CEA? - HELD THAT - There is no dispute that the appellant have supplied Medicament to Government Hospitals and Some Institutional Buyers. In case of such nature of transaction the medicaments are not sold in retail, therefore, retail sale price need not to be affixed. It is the submission of the appellant that they have not affixed retail sale price on such medicament and it is also mentioned on the package of the Medicament that it is not for a retail sale and it is for use by Government Hospitals and Some Institutional Buyers. In this fact the medicaments are not sold in retail and the retail sale price need not to be affixed. Consequently, the valuation of the said goods cannot be insisted upon under Section 4A of Central Excise Act, 1944. This bench in the case of in the case of Zydus Healthcare Ltd 2019 (10) TMI 810 - CESTAT AHMEDABAD under the same set of facts held that valuation of Medicament Supplied to Government Hospitals/ Institutional Buyers shall be governed by Section 4 and not Section 4A. This Tribunal has already taken a consistent view that the Medicament Supplies to Government Hospitals and Institutional Buyers shall be valued in terms of Section 4 and not Section 4 (A). Therefore, the issue is no longer res integra - Appeal allowed - decided in favor of appellant.
Issues: Valuation of Medicaments supplied to Government Hospitals and Institutional Buyers under Section 4 vs. Section 4A of Central Excise Act, 1944.
Analysis: Issue 1: Valuation under Section 4 vs. Section 4A The appellant cleared Medicaments to Government Hospitals and Institutional Buyers at transaction value as per Section 4 of Central Excise Rules, 1944. Show Cause Notices were issued for demand recovery of short payment of duty under Section 11A of Central Excise Act, 1944, along with interest and proposed penalty under Rule 25 of Central Excise Rules, 2002 read with Section 11 AC of Central Excise Act, 1944. The orders in original confirmed duty, interest, and imposed penalties, which were upheld by the Commissioner (Appeals), leading to the present appeals. Analysis: The appellant argued that the issue had been settled in previous decisions, citing cases of M/s. USV Ltd. and M/s. Zydus Healthcare Ltd. where this Tribunal held that valuation of supplies to Government Hospitals and Institutional Buyers must be under Section 4 of the Central Excise Rules, 2002, not Section 4A as proposed by the department. The Tribunal found that the medicaments were not sold in retail, as indicated on the package, and therefore, the retail sale price need not be affixed. The Tribunal referenced the provisions of the Drugs (Price Control) Order, 1995, to establish that the requirement of printing the MRP is only for products offered for retail sale. As the goods in question were not intended for retail sale but for consumption by institutional buyers, the provisions of Section 4A were deemed not applicable. The Tribunal's consistent view, supported by previous decisions, was that Medicament Supplies to Government Hospitals and Institutional Buyers should be valued under Section 4 and not Section 4A, rendering the impugned orders unsustainable and leading to their setting aside. Conclusion: The Tribunal allowed the appeals, dismissing the Revenue's allegation that the medicaments intended for institutional buyers should be assessed under Section 4A, and set aside the impugned orders. The consistent view of the Tribunal, based on previous decisions, established that valuation for such supplies should be done under Section 4 of the Central Excise Act, 1944.
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