2018 (1) TMI 256 - AT - Central Excise

Valuation - physician samples cleared by the respondents to brand owner - Section 4 of Central Excise Act 1944 or not? - Held that - these physician samples cleared by the respondent to the brand owner on some transaction value on which they have discharged the duty as per section 4 of the Act - on the similar facts this Tribunal has examined the issue and held that the appellants have correctly valued the physician samples cleared by them on transaction value/as per CAS-4 in the case Themis Laboratories Pvt.Ltd. 2011 (2) TMI 713 - CESTAT MUMBAI - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Valuation of physician samples under Central Excise Act, 1944 - Applicability of Section 4A for valuation - Comparison with Cadila Pharmaceuticals case - Interpretation of Section 4(1)(a) for assessable value determination.

Analysis:
The judgment dealt with the valuation of physician samples under the Central Excise Act, 1944, specifically focusing on whether the samples should be valued under Section 4 or Section 4A. The case involved a manufacturer of medicaments clearing physician samples to the brand owner. The Revenue contended that as the medicaments were to be valued under Section 4A, the physician samples should also fall under this provision. However, the Commissioner (Appeals) held that the samples should be valued under Section 4 since they were cleared against payment to the brand owner. The appellant relied on the Cadila Pharmaceuticals case and a CBEC circular to support their argument for valuation under Section 4A, while the respondent cited the Themis Laboratories case to uphold the valuation under Section 4.

The Tribunal analyzed the facts and found that the physician samples were cleared by the respondent to the brand owner against payment, unlike the Cadila Pharmaceuticals case where samples were distributed free of cost. Referring to the Themis Laboratories case, the Tribunal emphasized the importance of transaction value under Section 4(1)(a) for determining the assessable value. It was noted that the physician samples were cleared on a contractual price to non-related buyers, meeting the criteria for transaction value assessment under Section 4(1)(a). The Tribunal differentiated the present case from the IDMA case, where samples were distributed by manufacturers without a transaction value, unlike the situation here where samples were cleared on a transaction value basis to the brand owner.

Citing the Mayer Health Care Pvt. Ltd. case, the Tribunal reaffirmed that samples cleared on a principal-to-principal basis against consideration should be valued based on transaction value. Consequently, the Tribunal dismissed the Revenue's appeals, upholding the valuation of physician samples under Section 4. The decision was based on the correct application of Section 4(1)(a) for determining the assessable value of the samples cleared by the appellant to the brand owner on a transaction value basis. The judgment concluded by dismissing the appeals and disposing of miscellaneous applications and cross-objections.