2023 (9) TMI 1088 - AT - Central Excise

Valuation of Excise Duty - manufacturing physician samples, which were supplied free of cost - requirement to pay duty in terms of Section 4A of the Central Excise Act, 1944 i.e. MRP less abatement - HELD THAT - The said issue came before this Tribunal in the case of M/S MEDISPRAY LABORATORIES PVT. LTD., M/S MEDITAB SPECIALITIES PVT. LTD., AND M/S OKASA PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GOA 2017 (2) TMI 309 - CESTAT MUMBAI , wherein this Tribunal has observed As regards the physician samples manufactured and sold by Okasa Pvt. Ltd. to their principal, the transaction is on principal to principal basis. Therefore, whatever goods were sold by the appellant to their principal is correct transaction value in terms of Section 4. In both type of clearances in any circumstances, Rule 4 valuation shall not apply. As the issue has already been settled, therefore, the appellant is liable to pay the duty on transaction value and not on the basis of MRP less abatement. Therefore, the appellant is correctly valued the impugned goods. Therefore, they are not liable to pay any differential duty - Appeal allowed.

Summary

Issues involved:
The issue in the appeals is whether the manufacturer of toothpaste on job work basis is liable to pay duty on physician samples cleared on transaction value under Section 4A of the Central Excise Act, 1944 i.e. MRP less abatement or not.

Summary:

The appellant, a manufacturer of toothpaste on job work basis, was involved in manufacturing physician samples supplied free of cost without affixing MRP. The Revenue contended that duty should be paid under Section 4A of the Central Excise Act, 1944 i.e. MRP less abatement. The matter was adjudicated, and demand was confirmed for alleged under-valuation.

The appellant argued that the issue had been settled in a previous Tribunal case and prayed for the appeals to be allowed. The Revenue reiterated the findings of the impugned orders.

After hearing both parties, it was determined that the issue revolved around whether duty on physician samples should be paid on transaction value or MRP less abatement. Referring to a previous case, it was concluded that the appellant is liable to pay duty on transaction value and not on the basis of MRP less abatement. Therefore, the impugned orders were set aside, and the appeals were allowed with consequential relief.

The Tribunal clarified that in cases where physician samples are manufactured and sold to the principal, the transaction value is correct under Section 4, and Rule 4 valuation does not apply. The valuation should be determined based on the cost of raw material and job charges, including the profit of the job worker.

In conclusion, the appellant was found to have correctly valued the goods, and no additional duty was deemed payable. The impugned orders were set aside, and the appeals were allowed.

(Operative part of the order was pronounced in the open court)