2008 (11) TMI 514 - AT - Central Excise

Summary

Issues involved: Valuation of physician sample packs distributed free of cost; applicability of Board's circulars on assessable value determination.

The judgment deals with the disputed issue of the valuation of physician sample packs distributed free of cost. The Revenue contended that the assessable value should be based on the sale price of regular packs of the medicines, while the respondents cleared the samples by adopting 115% of the cost of production. The period in question was from February 2003 to January 2004 when Board's circular dated 1-7-2002 was in effect. The Commissioner (Appeals) accepted the assessee's position, citing various decisions of the Supreme Court supporting the applicability of the circular to the valuation of free physician samples.

The Revenue argued that a subsequent circular issued on 25-4-2005, which mandated valuation under Rule 4 of Central Excise Valuation Rules, should be applied. However, the Tribunal referred to a previous decision in the case of M/s. Alkem Laboratories Ltd. v. CCE & C, Daman [2007 (213) E.L.T. 684 (Tri.-Ahmd.)], where it was held that the 2005 circular cannot have retrospective effect. As the Board's circular from 2002 was in force during the relevant period, the Tribunal rejected the Revenue's appeals and cross-objections, affirming the binding nature of the earlier circular on the Revenue authorities.