2016 (3) TMI 566 - AT - Central Excise

Valuation of physician samples manufactured by the appellant and sold to the brand owner - Applicability of provisions of Section 4(1)(a) - Held that - The issue is no more res integra and is covered by the recent judgment of the apex court in the case of CCE & C, Surat vs. Sun Pharmaceuticals Inds. Ltd.Commr. of Central Excise & Customs, Surat Versus M/s Sun Pharmaceuticals Inds. Ltd. & Ors. 2015 (12) TMI 670 - SUPREME COURT wherein held that the transaction in question was between the assessee and the distributors. Between them, admittedly, price was charged by the assessee from the distributors. What ultimately distributors did with these goods is extraneous and could not be the relevant consideration to determine the valuation of excisable goods. When we find that price was charged by the assessee from the distributors, the show cause notice is clearly founded on a wrong reason. The case would squarely be covered under the provisions of Section 4(1)(a) of the Act. In view thereof, the Central Excise Rules would not apply in the instant case. - Decided in favour of assessee

Summary

Issues: Valuation of physician samples for duty liability

Issue 1: Valuation of physician samples
The judgment addresses the issue of the valuation of physician samples for duty liability. The appellant discharged duty based on the transaction value agreed with the brand owner, while the Revenue argued that duty should be based on the pro-rata value of the sale pack due to pharmaceutical goods being covered by MRP. The tribunal found that the issue was covered by a recent apex court judgment, emphasizing the importance of transaction value for excise duty determination.

Issue 2: Applicability of Section 4(1)(a) of the Act
The tribunal referred to the apex court judgment in CCE & C, Surat vs. Sun Pharmaceuticals Inds. Ltd., which clarified that the transaction value should be considered for excise duty calculation. The court rejected the Revenue's argument that free distribution of physician samples affected valuation, highlighting that the price charged between the assessee and distributors was the relevant factor. The tribunal dismissed appeals of the Revenue based on the correct interpretation of Section 4(1)(a) of the Act.

Issue 3: Dismissal of appeals
Based on the authoritative judicial pronouncement and the apex court judgment, the tribunal held that the impugned orders were unsustainable. Consequently, the tribunal set aside the impugned orders and allowed the appeals, leading to the dismissal of all appeals of the Revenue on the same issue. The decision was pronounced in open court, concluding the judgment.

This detailed analysis of the judgment highlights the key issues of valuation of physician samples for duty liability, the interpretation of Section 4(1)(a) of the Act, and the dismissal of appeals based on authoritative legal precedents and judicial pronouncements.