2011 (2) TMI 713 - AT - Central Excise

Valuation of physician samples - Valuation u/s 4 as transaction value or u/s 4A as MRP - Held that - it is admitted fact in the cases in hand that these physician samples were cleared by the appellant on principle to principle basis on a transaction value, which was admissible at the time of clearance of the physician samples, than the transaction value is to be determined as per Section 4 (1) (a) of the Act.

Summary

Issues:
1. Valuation of physician samples for Central Excise duty assessment under Section 4A of the Central Excise Act, 1944 versus transaction value or cost construction method.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Mumbai involved three appeals with a common issue regarding the valuation of physician samples for Central Excise duty assessment. The first appeal pertained to M/s. Themis Laboratories Pvt Ltd., where the assessable value of physician samples was contested against the value of trade packs of medicaments. The second appeal involved Meghdoot Chemicals Ltd., where the valuation of physician samples was challenged based on P & P contract arrangements and job work basis. The core issue was whether the physician samples should be assessed under Section 4A of the Central Excise Act, 1944 or based on transaction value or cost construction method.

The appellants argued that Section 4A was not applicable as MRP was not required on physician samples and advocated for valuation based on transaction value under Section 4 (1) (a) of the Act. They cited relevant case laws and contended that the Board's Circular and the decision of the Bombay High Court were not applicable to their cases as physician samples were sold, not distributed free of cost. They emphasized that transaction value should prevail over other valuation methods.

On the contrary, the Departmental Representative (DR) relied on precedents to support valuation under Section 4 (1) (b) read with Valuation Rules, emphasizing the need to consider the value of comparable goods. The DR highlighted the decision in a similar case where transaction value was challenged, indicating that price might not be the sole consideration in all instances.

After hearing both parties, the Tribunal analyzed Section 4 (1) (a) of the Act, which deems transaction value as the assessable value when goods are sold to a non-related buyer for delivery at the time and place of removal. The Tribunal noted that the appellants complied with these conditions, thereby justifying the use of transaction value for assessment.

The Tribunal distinguished the facts from the case cited by the DR and referred to a similar case where duty was payable on transaction value when goods were cleared for consideration, not distributed free. Consequently, the Tribunal held that the appellants correctly valued the physician samples based on transaction value or CAS-4, setting aside the impugned orders and allowing all appeals with consequential relief.