Physician Samples Distributed Free Of Cost By Medicament Manufacturer, Excise Duty Payable On Transaction Value: CESTAT
Mariya Paliwala
25 Oct 2023 2:00 PM IST
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that physician samples are not sold by affixing the MRP on them; the same has to be distributed free of charge by the medication manufacturer. In those circumstances, the excise duty is payable on transaction value.The bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) has...
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that physician samples are not sold by affixing the MRP on them; the same has to be distributed free of charge by the medication manufacturer. In those circumstances, the excise duty is payable on transaction value.
The bench of Ashok Jindal (Judicial Member) and K. Anpazhakan (Technical Member) has observed that the assessee has not short-paid the duty and that the assessee has correctly paid the duty on physician samples on transaction value.
The assessee or appellant is a manufacturer of medicine. During the course of scrutiny, it was found that the appellant has cleared free physician samples, and they have not paid the duty on the samples of medicines on the basis of MRP-based value under Section 4A instead of Section 4.
Section 4A(2) of the Central Excise Act, 1944, as amended, provides, inter alia, that excisable goods in respect of which the retail sale price is required to be declared on the package as per the provisions of the standards of the Weights and Measures Act, 1976, or the Rules made thereunder and the goods are specified by the Central Government by any notification are chargeable to Central Excise duty with reference to value, which shall be deemed to be the retail sale price declared on such goods less the admissible abatement.
Free samples of medicines are assessable under Section 4 of the Central Excise Act, 1944, as amended and read with Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, and also should be equal to such goods sold by the appellant for delivery of any other goods nearest to the time of the removal of goods under assessment.
On determination of the value of the medicines cleared as samples, it was found that the appellant has short-paid duty, which was recoverable from the appellant.
The CESTAT allowed the appeal and noted that the appellant is not liable to pay duty as demanded.
Counsel For Appellant: None
Counsel For Respondent: P.K.Ghosh
Case Title: M/s Parker Robinson Private Limited Versus Commissioner of Central Excise, Kolkata VI
Case No.: Excise Appeal No.839 of 2011
