2017 (8) TMI 987 - AT - Central Excise

Valuation - whether the physicians sample not meant for sale shall be valued under Section 4 or 4A of Central Excise Act, 1994? - Held that - The Circular No. 813, dated 25-4-2005 says that the provision contained in Rule 4 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 shall apply to value the physicians sample - In view of the Board s clarification that the goods of above kind shall be governed by Rule 4 of the Valuation Rules, it follows that the physicians sample shall be governed by Section 4 of Central Excise Act, 1944 for valuation - appeal allowed - decided in favor of appellant.

Summary

Issues:
Valuation of "physicians sample" under Section 4 or 4A of Central Excise Act, 1994.

Analysis:
The judgment pertains to the controversy surrounding the valuation of "physicians sample" under the Central Excise Act, 1994, specifically whether it should be valued under Section 4 or Section 4A. The appellant argued that since the goods were not meant for retail sale, they should not be subject to MRP assessment under Section 4A but should instead be valued under Section 4. The Revenue, on the other hand, issued a show cause notice to value the goods under Section 4A. The Board issued Circulars providing guidelines for the valuation of such goods, stating that Rule 4 of the Valuation Rules should apply to "physicians sample." The Tribunal noted that the Board's clarification explicitly directed that goods like "physicians sample" should be governed by Section 4 of the Central Excise Act for valuation, leaving no room for ambiguity.

The Tribunal examined a specific show cause notice alleging that "physicians sample" cleared after a certain date were subjected to Section 4A levy. The Revenue relied on Circulars issued by the Board, particularly Circular No. 813/10/2005-CX, to support its position that Rule 4 of the Valuation Rules should apply to value "physicians sample." However, the Tribunal emphasized that the Board's clarification unambiguously indicated that such goods should be valued under Section 4 of the Central Excise Act, 1944. Consequently, the Tribunal allowed all appeals, ruling that "physicians sample" shall be valued under Section 4 of the Central Excise Act, 1944.

During the proceedings, the learned AR highlighted that valuation should be conducted following Rule 4 of the Valuation Rule. However, the Tribunal observed that the show cause notice did not include such a proposition. Therefore, the Tribunal concluded that the adjudication should not extend beyond the terms of the show cause notice. As a result, the Tribunal held that the valuation of "physicians sample" shall be governed by Section 4 of the Central Excise Act, 1944, in accordance with the Board's clear directive, thereby resolving the controversy surrounding the issue.