2008 (11) TMI 540 - AT - Central Excise

Valuation - Physician s sample - Special packing used - Held that - the cost of packing gets included in the price of physician s sample which is being worked out on pro rata basis on regular pack which includes the cost of special packing also. In view of this, we find no force in the SDR s plea that once Modvat credit has been taken of the duty on the special packing its cost needs to be included separately as such cost is already included in the cost of regular pack which has been taken for arriving at pro rata price - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the demand of the differential duty on physician's samples of medicaments cleared by the appellant is sustainable in law.

Analysis:
In this appeal, the main issue is whether the demand of the differential duty on physician's samples of medicaments cleared by the appellant is sustainable in law. The samples were cleared in special packing called catch cover/catch boxes, while identical goods to buyers were sold without such packing. The lower authorities held that the cost of the catch cover should be included in the assessable value of the samples as the artwork on the cover added value to the goods, leading to the duty demand.

The appellant relied on the Drugs Price Control Order (DPCO) 1995 and case law to support their claim. They argued that the price of physician's samples should not exceed the DPCO limit, making it impermissible to include the catch cover cost in the assessable value. Reference was made to the Tribunal's decision in Blue Cross Laboratory case and Softsule Pvt. Ltd. case, where it was established that the assessable value of physician's samples should be determined on a pro rata basis compared to identical goods sold.

The Tribunal considered the submissions and noted that the DPCO did not support the appellant's case as it applied only to retail sales of medicaments. Relying on the Softsule Pvt. Ltd. case, the Tribunal held that the cost of special packing for physician's samples should be included in the price of the regular pack, which covers all expenses for selling the product. Therefore, the cost of packing was already included in the pro rata price calculation based on the regular pack.

Since the issue was squarely covered by the Tribunal's decision in the Softsule Pvt. Ltd. case, the appeal was allowed, and the order of the Commissioner (Appeals) was set aside, providing consequential relief to the appellant.