2018 (3) TMI 1535 - AT - Central Excise

Refund claim of excess duty paid - valuation of physician samples - Circular No.813/10/2005-CX dt.25th April, 2005 - Held that - it is evident that during the period under consideration, the value will have to be made under Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The same was done in the instant case - refund rightly rejected - appeal dismissed - decided against Appellant.

Summary

Issues:
- Appeal against Orders-in-Appeal passed by Commr. of Central Excise
- Dispute over assessable value of physician samples
- Appellant's claim for refund based on excess duty payment
- Applicability of Supreme Court ruling on cost of production
- Circular issued by the Board for valuation of physician samples
- Interpretation of Central Excise Valuation Rules for determining value
- Rejection of refund claim and dismissal of appeals

Analysis:
The appeal was filed against Orders-in-Appeal issued by the Commr. of Central Excise, Kolkata, concerning the assessable value of physician samples distributed by the appellant free of cost to medical practitioners during the period from November 2001 to October 2002. The appellant had paid duty on a pro-rata basis, resulting in an excess payment, and sought a refund based on this overpayment. The appellant contended that the value should be determined on the cost of production of goods, citing a Supreme Court ruling in Biochem Pharmaceuticals Industries Ltd. v. Commr. of Central Excise, Vapi. However, it was noted that the Supreme Court's ruling was limited to a specific period preceding the one in question, rendering it inapplicable.

On the other hand, the Revenue argued that a Circular (No. 813/10/2005-CX) issued by the Board clarified that the valuation of physician samples should be done under Rule 4 of the Central Excise Valuation Rules, 2000. This Circular was challenged in a Bombay High Court case, Indian Drugs Manufacturer's Assocn. v. Union of India, where it was held that the valuation of physician samples should be determined under Rule 11 read with Rule 4, not Rule 8. The Court emphasized that Rule 4 is the general rule for valuation, and thus, the valuation of physician samples under Rule 4 was deemed reasonable and consistent with the law.

Consequently, it was established that the value of physician samples during the relevant period should be determined under Rule 4 of the Central Excise Valuation Rules, 2000. As the valuation in the instant case was conducted in accordance with this rule, the refund claim was rejected, leading to the dismissal of both appeals filed by the appellant. The Tribunal found no grounds to interfere with the impugned orders, thereby upholding the decision to sustain the rejection of the refund claim.