2018 (3) TMI 251 - AT - Central Excise

Valuation - physician samples - rule 8 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000 - Held that - Undoubtedly, in the impugned proceedings there has been no attempt to suggest that the valuation of the samples should be in compliance with section 4A of Central Excise Act, 1944 - in the absence of demand arising from implementation of the MRP-based assessment of samples, the authority drawn therefrom in the show cause notice leading to the present proceedings fails. As samples have to be valued under section 4 of Central Excise Act, 1944 which was recast in 2000, with corresponding changes in the valuation rules and in accordance with which rule 8 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000 was made applicable-a position which remains unchanged even after the coverage under MRP-based assessment for commercial goods to samples, the basis of the show cause notice for revising the valuation method will not sustain. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Valuation of physician samples under Central Excise Act, 1944 - Applicability of valuation rules - Compliance with circulars issued by Central Board of Excise & Customs - Interpretation of relevant legal provisions.

Analysis:

1. Valuation Methodology Dispute:
The Tribunal dealt with the issue of valuation methodology for physician samples cleared by the appellants, who are manufacturers of patent and proprietary medicines. The dispute arose from the circulars issued by the Central Board of Excise & Customs regarding the method of valuation. The appellants argued that the circulars mandating a specific valuation method were inoperable, citing relevant legal precedents to support their contention.

2. Application of Valuation Rules:
The Tribunal emphasized the need to value physician samples under section 4 of the Central Excise Act, 1944, as per the valuation rules in force. It was noted that the circulars attempting to change the valuation method prescribed under rule 8 of the Central Excise (Determination of Price of Excisable Goods) Rules, 2000 were not applicable. The Tribunal highlighted that the valuation methodology for physician samples remained unchanged even after the introduction of MRP-based assessment for commercial goods.

3. Legal Precedents and Interpretation:
The Tribunal referred to the decision in Commissioner of Central Excise, Goa v. Cosme Remedies Ltd to establish the applicable provision for the valuation of physician samples. It was clarified that the differential duty imposed by the impugned orders did not align with the legal framework. By analyzing the legal precedents and statutory provisions, the Tribunal concluded that the demands raised against the appellants were not legally sustainable.

4. Decision and Relief Granted:
Ultimately, the Tribunal allowed the appeals, setting aside the demands raised against the appellants for the clearance of physician samples. The judgment highlighted the importance of adhering to the valuation rules under the Central Excise Act, 1944, and emphasized the need for compliance with the relevant legal provisions rather than circular instructions that were deemed inoperable by the higher courts.

This comprehensive analysis of the judgment underscores the significance of legal precedents, statutory provisions, and the correct interpretation of valuation rules in resolving disputes related to the clearance of physician samples under the Central Excise Act, 1944.