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2022 (9) TMI 431 - AT - Central ExciseValuation - demand of differential duty - PP medicaments falling under Chapter 30 of Central excise Act - physician samples sold - to be valued at Pro rata on MRP Basis or not - Section 4A of Central Excise Act, 1944 - HELD THAT - The fact of the case is not under dispute that the appellant have sold the Physician Sample of PP medicine on Principle to Principle basis to the Brand Owner. Therefore, the valuation under Section 4 (1) (a) was correctly done by the appellant. The proposal by the department that the valuation should have been done by the appellant on Pro- rata of MRP is not applicable in the present case for the reason that such valuation was already opted by the appellant in case of removal of goods manufactured on job work basis for the reason that the said transaction does not involve sale. Since in the present case the transaction is clearly of sale on Principle to Principle basis, the principle of pro rata of MRP shall not apply. From the judgment, in the case of SOFTECH PHARMA PVT. LTD. VERSUS C.C.E, S.T. - DAMAN (VICE-VERSA) 2019 (5) TMI 575 - CESTAT AHMEDABAD , it is settled that in case of manufacture and sale of Physician Sample valuation is governed under Section 4 (1)a) of central Excise Act, 1944. Therefore, the issue is no longer res- integra. Appeal allowed - decided in favor of appellant.
Issues: Valuation of physician samples under Central Excise Act, 1944.
Analysis: 1. The appellant, a manufacturer of PP medicaments, cleared physician samples on MRP basis valuation under Section 4A of Central Excise Act, 1944. However, SCNs were issued for differential duty, alleging valuation at Pro rata on MRP basis for physician samples sold directly. The Adjudicating Authority confirmed the demand and imposed a penalty on the factory manager. The appeal before the Commissioner (Appeals) was rejected, leading to the current appeal. 2. The appellant argued that physician samples were sold on behalf of the brand owner, warranting valuation under Section 4(1)(a) of the Act. Citing various judgments, including those by the Supreme Court and CESTAT Ahmedabad, the appellant contended that the issue was settled in favor of valuation based on transaction value under Section 4. 3. The Revenue, represented by the Superintendent (AR), reiterated the findings of the impugned order, supporting the valuation based on Pro rata of MRP. 4. The Tribunal analyzed the facts and found that the appellant sold physician samples on a Principle to Principle basis to the Brand Owner, justifying valuation under Section 4(1)(a). The Tribunal rejected the department's proposal for Pro rata of MRP valuation, citing precedents like Sun Pharmaceutical Industries Ltd. and Softtech Pharma Pvt. Ltd. The Tribunal held that in cases of physician samples sold, valuation should be based on transaction value under Section 4, not Pro rata of MRP. Relying on established judgments, the Tribunal set aside the impugned orders and allowed the appeals. 5. The Tribunal's decision aligned with previous rulings, establishing that in cases of manufacturing and selling physician samples, valuation is governed by Section 4(1)(a) of the Central Excise Act, 1944. Consequently, the issue was deemed settled, and the impugned orders were overturned, with appeals allowed. 6. The judgment was pronounced on 08.09.2022, affirming the Tribunal's decision to set aside the impugned orders and allow the appeals.
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