2006 (1) TMI 432 - AT - Central Excise

Summary

Issues: Valuation of physician samples of medicament under the Central Excise Act, 1944.

Analysis:

1. Valuation of samples post-July 2000: The appeals involved the valuation of physician samples of medicament cleared by the applicant under the Central Excise Act, 1944. The applicants followed the prescribed formula for valuation post-July 2000 as per CBEC Circular No. 643/34-2002-C.X. The Revenue did not contest this position, leading to the conclusion that no deposit of duty was required for demands after July 2000.

2. Valuation of samples pre-July 2000: Prior to July 2000, the applicants used a pro rata formula for determining the value and discharge of duty on samples. The Revenue argued for the application of costing rules, including adding the value of specific packing materials procured for the samples. The Revenue's stance was that the cost of such packing materials should be included in the valuation. However, the applicants contended that they followed the pro rata rule as the Revenue had objected to the costing rules formula.

3. Judicial precedents and detailed valuation analysis: The issue of valuation of physician samples had been a subject of dispute between the Revenue and Assessees, leading to legal proceedings up to the Hon'ble Apex Court. The Tribunal considered the latest order in the case of Medley Pharmaceuticals Ltd v. C&CS, Valsad - 2005 (183) E.L.T. 471 (Tri. - Mum) and recognized the complexity of the valuation issue. The Tribunal acknowledged the need for a detailed examination of the valuation, especially regarding the costing method for adding the value of specific packing materials and the exclusion of costs related to medicines and capsules placed in the packing. Given the legal and factual complexities involved, the Tribunal deemed a full waiver of pre-deposit of duty necessary even for the period before July 2000.

4. Waiver of pre-deposit requirement: Based on the findings and analysis, the Tribunal ordered a complete waiver of the pre-deposit requirement under Section 35F of the Central Excise Act, 1944 to proceed with hearing the appeals. The applications were disposed of accordingly, emphasizing the need for a thorough valuation analysis and the waiver of pre-deposit to address the legal and factual complexities involved in the case.