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Bora Pharma Pvt. Ltd V/S Commissioner of C. Ex., Aurangabad

    Final Order No. A/90187/2017-WZB/EB in Appeal No. E/638/2008-Mum
    Decided On, 23 October 2017
    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai
    By, THE HONORABLE JUSTICE: RAMESH NAIR
    By, MEMBER AND THE HONORABLE JUSTICE: RAJU
    By, MEMBER
    For Petitioner: P.S. Tendulkar, Consultant And For Respondents: S.V. Nair, AC (AR)


Judgment Text

1. This appeal has been filed by Bora Pharma Pvt. Ltd. against confirmation of demand and imposition of penalty. Ld. Counsel for the appellants argued that they are manufacturing medicaments and were clearing physician's samples free of cost for distribution among doctors. The appellants were assessing the goods under Rule 8 of the Central Excise Valuation Rules in terms of the C.B.E. & C. Circular No. 643/34/2002-CX, dated 1-7-2002. Revenue sought to recover duty of the said samples relying on the C.B.E. & C. Circular No. 813/10/2005-CX, dated 25-4-2005 wherein it was directed that the assessment should be under Rule 4 of Valuation Rules, 2000. He pointed out that the said circular was challenged in writ petition before the Hon'ble High Court by the Indian Drug Manufacturers Association. The Hon'ble High Court upheld the circular issued by the Board, dated 25-4-2005. Consequently, demand show cause notices for the period April, 2005 to March, 2007 were issued and confirmed by the lower authorities. Penalty was also imposed. The appellants relied on the decision of the Tribunal in the case of Anglo French Drugs & Indus. Ltd : 2008 (231) E.L.T. 636 and Twenty First Century Pharmaceuticals Pvt. Ltd: 2017 (349) E.L.T. 492. On the issue of limitation, ld. Counsel relied on the decision of Alicon Pharma P. Ltd : 2015 (322) E.L.T. 47. He also relied on the decision of Zyg Pharma Pvt. Ltd : 2017 (348) E.L.T. 389.

2. Ld. AR relied on the impugned order.

3. We have gone through rival submissions. We find that the appellants were assessing physician's samples under Rule 8 of Central Excise Valuation Rules, 2000. The appellants have sought to rely on the decision in case of Twenty First Century Pharmaceuticals Pvt. Ltd. (supra). It is seen that in the said case Tribunal had upheld assessment under Rule 4 of the Central Excise Valuation Rules and not under Rule 8. Similarly, in the case of Zyg Pharma Pvt. Ltd. (supra) relied upon by the appellants it is seen that the facts are different insofar as the appellants in that case were not distributing samples free of cost themselves. In the said case, the appellants were manufacturing physician's samples for the client, who in turn were distributing free of cost. The appellants have relied upon the decision of Anglo French Drugs & Indus. Ltd. (supra). It is seen that the said decision has been passed without benefit of the decision of the Hon'ble High Court in Indian Drugs Manufacturer's Association : 2008 (222) E.L.T. 22 (Bom.). In view of above, it is apparent that Rule 8 of the Central Excise Valuation Rules cannot be used for valuation of the physician's samples cleared by the appellants free of cost, and in such circumstances Rule 4 of the Valuation Rules would be applicable. Thus appeal cannot be allowed on merit.

4. On the issue of limitation, it is seen that part of the period involved in the show cause notice is beyond the normal period of limitation. On perusal of the show cause notice shows that the extended period of limitation has been invoked alleging that the appellants failed to bring to the notice of the revenue that they were paying duty on cost construction method. It is seen that prior to issue of C.B.E. & C. Circular No. 813/10/2005-CX , dated 25-4-2005, the revenue was of the view that the assessment in such cases needs to be done under Rule 8 of the Central Excise Valuation Rules, as is apparent from C.B.E. & C. Circular No. 643/34/2002-C

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X, dated 1-7-2002. In these circumstances and in the absence of any evidence to support the allegation of suppression, misrepresentation, extended period of limitation cannot be invoked. Consequently, penalty under Section 11 AC cannot be imposed in these circumstances. The demand of duty and interest for the period within the limitation is upheld. Appeal is partly allowed in above terms.
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