2018 (6) TMI 1579 - AT - Central Excise

Method of Valuation - clearance of physician samples intended for distribution free of cost to Doctors - appellants have discharged the duty on cost construction basis while Revenue sought to demand duty on the basis of MRP - Held that - The issue involved in the instant case is squarely covered by the decision of the Tribunal in the case of Sun Pharmaceuticals 2015 (12) TMI 670 - SUPREME COURT , where it was held that In so far as clearances of Physician samples on sale are concerned, the assessment is to be done under Section 4(1)(a). In so far as manufacture is done on job work basis the assessment is to be done. The demand on the basis of MRP cannot, therefore, be sustained - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand of duty on physician samples based on MRP valuation method; Applicability of extended period of limitation; Different valuation methods for physician samples sold and manufactured on job-work basis.

Analysis:
The appeal was filed against the confirmation of duty demand on physician samples. The appellant discharged duty on a cost construction basis, while the Revenue sought to demand duty based on MRP. The appellant argued that the issue was disputable within the industry and referred to a circular by CBE&C. The Tribunal had previously upheld different views on this matter. However, based on a decision of the High Court, it was held that physician samples are liable to be charged Central Excise duty based on MRP. The appellant further argued that MRP valuation should not apply to certain clearances based on various decisions cited.

The learned AR relied on the impugned order, but the Tribunal found that the issue was covered by a previous decision in the case of Sun Pharmaceuticals. The Tribunal emphasized that the price was charged by the assessee from the distributors, and the transaction between them was relevant for valuation. Therefore, the case fell under Section 4(1)(a) of the Act, and the demand based on MRP was not sustainable. The assessment for physician samples sold was to be done under Section 4(1)(a), while for samples manufactured on a job-work basis, the assessment was to be done in accordance with the decisions of the Apex court in the case of Ujjagar Prints.

Ultimately, the appeal was allowed based on the decision referenced, and the demand for duty on physician samples was not upheld. The judgment was pronounced in court on 21/06/2018.