2024 (6) TMI 440 - AT - Central Excise

Method of valuation - manufacture and clearance of medicaments - to be assessed u/s 4 or 4A of Central Excise Act, 1944 read with abatement Notification No. 49/2008-CX(NT) dated 24.12.2008 - case of the department is that the entire sale i.e. whether sale in retail or for institution should be covered under by Section 4A for the valuation purpose - demand of differentail duty - demand of cenvat credit in respect of removal and retention of control samples. Whether the appellant is liable to pay excise duty on the product namely, medicament which are supplied to institution under Section 4 or Section 4A of the Central Excise Act, 1944? - HELD THAT - This issue is no longer res integra as has been decided in various judgments that whether medicaments which supplied for use of institution and no retail sale price is affixed on the pack of the medicament., the assessment of value for the purpose of payment of excise duty shall be done under Section 4 of the Central Excise Act, 1944. In the case of M/S USV LTD., PARVEZ K KUMANA, DILIP A PANDIT, JAYESH K VASAVADA VERSUS C.C.E. S.T., DAMAN 2019 (5) TMI 507 - CESTAT AHMEDABAD , this Tribunal considering the same issue whether the partly medicament were sold through dealer in retail and partly to the institution, the Tribunal held that the goods which were supplied for the consumption of institution, the valuation provision which is correctly applicable is section 4 of Central Excise Act and not Section 4A. In view of above judgment which are exactly on the identical facts of the present case it was consistently held that in case of supply made to institutional buyer, the valuation shall be done under Section 4 and not under Section 4A of the Central Excise Act, 1944. Demand of cenvat credit on removal and retention of control samples - HELD THAT - In this regard, the appellant s submission is that since there is a diversion view on this issue even though the appellant have admittedly paid the duty and not contesting the same, their prayer is to set aside the penalty corresponding to the duty of such control samples - there are force in the argument of the appellant, since the appellant have given up the merit in this case, the same is not addressed, therefore, the payment of cenvat credit/ duty on the control sample is not under dispute and the same is maintained. Penalty - HELD THAT - Considering the issue being debatable ,the penalty is not imposable, hence, the penalty corresponding to the duty on Control Sample is set aside. In the present case also, the impugned orders are not sustainable on the main issue. Accordingly, the impugned orders are modified as above - appeal allowed.

Summary

Issues Involved:
1. Whether the valuation of medicaments supplied to institutions should be done u/s 4 or u/s 4A of the Central Excise Act, 1944.
2. Demand of CENVAT credit on removal and retention of control samples.

Summary:

Issue 1: Valuation of Medicaments Supplied to Institutions

The primary issue is whether the appellant is liable to pay excise duty on medicaments supplied to institutions under Section 4 or Section 4A of the Central Excise Act, 1944. The appellant argued that supplies to institutions like hospitals are not retail sales and thus should be valued under Section 4, not Section 4A. The Tribunal found that this issue is no longer res integra, citing various judgments, including USV Ltd., Medley Pharmaceuticals Ltd., Zydus Healthcare Ltd., and JB Chemicals & Pharmaceuticals Ltd., which consistently held that medicaments supplied to institutions should be valued u/s 4. The Tribunal concluded that since the supplies are not for retail sale, the valuation should be done under Section 4, not Section 4A. Consequently, the impugned orders were set aside, and the appeals were allowed.

Issue 2: Demand of CENVAT Credit on Control Samples

The appellant did not contest the duty demand on control samples but requested the penalty be set aside due to divergent views on the issue. The Tribunal agreed, noting that the issue is debatable. Therefore, while maintaining the payment of duty on control samples, the penalty was set aside.

Considering the settled legal position, the Tribunal modified the impugned orders accordingly and allowed the appeals. (Pronounced in the open court on 03.06.2024)