2015 (7) TMI 1243 - AT - Central Excise

Valuation - physician samples manufactured, cleared on payment of duty of excise on the basis of the contracted value - Revenue entertained a view that appellant has to pay duty on the pro-rata basis corresponding to the value of the regular packs - Held that - where such physician samples are not being manufactured by the regular pack manufacturer, the same are required to be assessed to duty on the transaction value/contracted value in terms of the purchase orders - issue has been settled in the case of M/s GELNOVA LABORATORIES (I) PVT LTD Versus COMMISSIONER OF CENTRAL EXCISE 2014 (2) TMI 581 - CESTAT MUMBAI , where it was held that physician samples manufactured on principal to principal basis are required to be assessed under Section 4(1)(a) of the Central Excise Act - appeal allowed - decided in favor of appellant.

Summary

Issues: Assessment of duty on physician samples manufactured by an appellant for a principal manufacturer.

Analysis:
The dispute in the appeals revolved around the assessment of duty on physician samples manufactured by the appellant for a principal manufacturer. The revenue contended that duty should be paid on a pro-rata basis corresponding to the value of the regular packs, resulting in raised differential duty and confirmed demand against the appellant. However, the Tribunal, after considering the arguments from both sides, referred to the Larger Bench decision in the case of Cadila Pharmaceuticals Ltd. The Tribunal clarified that physician samples manufactured by a medicament manufacturing unit, intended for free distribution to doctors, should be assessed to duty based on the pro-rata value of the regular packs. Nevertheless, if such samples are not manufactured by the regular pack manufacturer, they should be assessed to duty based on the transaction value or contracted value in accordance with the purchase orders. This interpretation was supported by various decisions favoring the assessee, including those listed in the judgment. Consequently, the Tribunal set aside the impugned order and allowed all the appeals, providing consequential relief to the appellant.

In conclusion, the Tribunal's decision clarified the assessment of duty on physician samples manufactured by the appellant for a principal manufacturer. By referencing relevant legal precedents and considering the specific circumstances of the case, the Tribunal ruled in favor of the appellant, overturning the revenue's contention regarding the pro-rata basis for duty assessment. The judgment highlighted the importance of assessing duty based on the transaction value or contracted value when physician samples are not manufactured by the regular pack manufacturer, ensuring a fair and consistent application of excise duty regulations in such scenarios.