2016 (8) TMI 880 - AT - Central Excise

Demand alongwith interest and penalty - sale of free samples to pharmaceutical companies - appellants had determined the value of physician samples under Section 4(1)(a) and adopted a notional transaction value for payment of duty under Section 4 rather than partly assessed under Section 4A on the basis of MRP and partly assessed under Section 4 on the basis of transaction value under Circular No.625/16/2002-CX dt. 28/02/2002 - Held that - the issue is squarely covered vide the Final Order passed by Tribunal in appellants own case for different/subsequent period. The appellant also submitted that the issue is covered by the judgment laid in CC Vs. Sidmak Laboratories (India) Ltd. 2008 (9) TMI 360 - CESTAT, AHMEDABAD which was also upheld by the Hon ble Supreme Court 2009 (7) TMI 1233 - SUPREME COURT . By applying the dictum of judgments, the demand is unsustainable. - Decided in favour of assessee with consequential relief

Summary

Issues: Valuation of physician samples for duty payment under Central Excise Act, 1944

Issue 1: Valuation of physician samples
The appellant, engaged in manufacturing medicaments, sold physician samples to pharmaceutical companies without affixing MRP as these were not meant for retail sale. The Department contended that the valuation method adopted by the appellant was incorrect. A show-cause notice was issued, alleging that the value of physician samples should have been determined partly under Section 4A based on MRP and partly under Section 4 based on transaction value. The original authority confirmed the demand, leading to the appeal.

Analysis:
The appellant's argument was that physician samples were not meant for retail sale and were sold to pharmaceutical companies against a price agreed upon, not free of cost. The appellant differentiated the physician samples from the medicaments meant for retail sale by using different packaging and labeling. The Tribunal referred to a previous order in the appellant's own case and a judgment in CC Vs. Sidmak Laboratories (India) Ltd., upheld by the Supreme Court. Relying on these precedents, the Tribunal held that the demand was unsustainable and set aside the impugned order. The appeal was allowed with consequential reliefs.

Conclusion:
The Tribunal's decision was based on the interpretation of the valuation method for physician samples under the Central Excise Act, 1944. By applying established legal principles and precedents, the Tribunal ruled in favor of the appellant, emphasizing the distinction between physician samples and medicaments meant for retail sale. The judgment provided clarity on the valuation of physician samples for duty payment, ensuring consistency in the application of excise laws.