MEDLEY PHARMACEUTICALS LTD versus THE COMMISSIONER OF CENTRAL EXCISE AND . CUSTOMS, DAMAN

MEDLEY PHARMACEUTICALS LTD versus THE COMMISSIONER OF CENTRAL EXCISE AND . CUSTOMS, DAMAN

Liability to excise duty attaches upon manufacture, not sale; physician samples, though distributed as free samples and prohibited from sale, are manufactured goods and therefore excisable; prohibition under Drugs and Cosmetics Act, 1940 and Rules does not exempt them from excise duty; valuation must be done on pro-rata basis corresponding to trade packs.

Parties
Appellant: Medley Pharmaceuticals Ltd.; Respondent: The Commissioner of Central Excise and Customs, Daman
Jurisdiction
India
Judgment Date
14 January 2011
Procedural Posture
Civil Appeal / Supreme Court Final Decision
Outcome
Civil Appeal No. 3626 of 2005 allowed and remitted to Adjudicating Authority; Civil Appeal Nos. 1354-1355 of 2010 dismissed; parties to bear own costs.
Legal Topics
Excise Duty, Valuation of Goods, Marketability, Pharmaceuticals, Doctrine of Merger
Taxation Administrative Law Excise Duty Valuation of Goods Marketability Pharmaceuticals Doctrine of Merger

Case Brief

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Parties

Medley Pharmaceuticals Ltd.

Appellant

The Commissioner of Central Excise and Customs, Daman

Respondent

Procedural Posture

Civil Appeal / Supreme Court Final Decision

Legal Issues

  1. 1 Whether physician samples manufactured and distributed as free samples are liable to excise duty despite prohibition on sale under Drugs and Cosmetics Act, 1940 and Rules
  2. 2 What is the appropriate method of valuing physician samples for excise duty

Ratio Decidendi

Liability to excise duty attaches upon manufacture, not sale; physician samples, though distributed as free samples and prohibited from sale, are manufactured goods and therefore excisable; prohibition under Drugs and Cosmetics Act, 1940 and Rules does not exempt them from excise duty; valuation must be done on pro-rata basis corresponding to trade packs.

Court Disposition

Civil Appeal No. 3626 of 2005 allowed and remitted to Adjudicating Authority; Civil Appeal Nos. 1354-1355 of 2010 dismissed; parties to bear own costs.

Orders

  • Matter remitted to Adjudicating Authority to value goods on pro-rata basis for relevant period.
  • Civil Appeal Nos. 1354-1355 of 2010 dismissed.