Valuation of Excise Duty on Clearance of Physical Samples of Medicine Must be done in Accordance with Rule 4 of Central Excise (Valuation) Rules: CESTAT [Read Order]

The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the valuation of excise duty on the clearance of physical samples of medicines should be done under Rule 4 of the Central Excise (Valuation) Rules,2000. 

Elvina Pharmaceuticals Ltd, the appellant assessee are manufacturers of P & P Medicines falling under the Central Excise Tariff Act, 1985, and manufacture the goods on a loan license basis for Wallace Pharmaceuticals Ltd and cleared physician samples by discharging duty @ 110% of the cost of production. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the differential duty demand of Rs. 7,33,036/- with interest and proposal for a penalty. 

Neeraj Kumar, the counsel for the department contended that the correct method of valuation of physical samples was under Section 4 of the Central Excise Act read with Rule 4 of the Central Excise (Valuation) Rules. 

Also submitted that in the case of Medley Pharmaceuticals Ltd. Vs. Commr. Of Central Excise, the court held that physician samples cleared adopting Rule 8 of the Central Excise (Valuation) Rules was contrary to the law laid down by the Supreme Court and the correct method of valuation was under Section 4 of Central Excise Act read with Rule 4 of the Central Excise (Valuation) Rules. 

The Bench observed that in the case of in the case of Amazon Drugs Pvt. Ltd, the court held that the valuation of the physician sample is under Rule 8 of the Central Excise (Valuation) Rules. 

The two-member bench comprising D M Misra (Judicial) and Bhagya Devi (Technical) upheld the differential duty demand while dismissing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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