2023 (8) TMI 1443 - AT - Central Excise

Method of valuation - Clearance of physician samples by discharging duty @ 110% of the cost of production - to be valued under Rule 8 or Rule 4 of the Central Excise (Valuation) Rules 2000? - HELD THAT - The Hon ble Supreme Court in MEDLEY PHARMACEUTICALS LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE 2011 (1) TMI 13 - SUPREME COURT has held that This Court has upheld the conclusion of the Tribunal that the physician s samples have to be valued on pro-rata basis. Thus the impugned order is upheld and the appeal being devoid of merit accordingly is dismissed.

Summary

Issues: Valuation of physician samples under Central Excise Act, 1944 u/s 4/4A.

Valuation of Physician Samples:
The appeal was filed against the Order-in-Appeal No. 94/2010 dated 16/02/2010 by the Commissioner of Central Excise (Appeals) Mangalore regarding the valuation of physician samples under Chapter Sub Heading 3003.10.00 of Central Excise Tariff Act, 1985. The appellants cleared physician samples by discharging duty @ 110% of the cost of production, which was challenged by the Revenue as not in accordance with the correct valuation method under Section 4/4A of Central Excise Act, 1944. Two show-cause notices were issued for different periods demanding duty and penalties. The Commissioner (Appeals) partly allowed the appeals by setting aside the demand for one period but upholding it for the other. The Revenue contended that the valuation issue is settled as per the recent judgment of Tribunal at Bangalore and the correct method of valuation is under Section 4 of Central Excise Act, 1944 read with Rule 4 of the Central Excise (Valuation) Rules, 2000.

Judgment and Ruling:
The Tribunal considered the grounds of appeal and submissions by the Revenue. The main issue was whether the valuation of physician samples should be in accordance with Rule 8 or Rule 4 of the Central Excise (Valuation) Rules, 2000. Referring to the Supreme Court's decision in Medley Pharmaceuticals case, it was established that physician samples should be valued on a pro-rata basis. The Tribunal also cited its own previous decision in Amazon Drugs Pvt. Ltd.'s case, where it was held that the valuation under Rule 8 of the 2000 Rules by adding 15% profit to the cost of manufacture was not accepted by the Supreme Court. Therefore, following the precedent set by the Supreme Court and the Tribunal, the impugned order was upheld, and the appeal was dismissed as devoid of merit.