2018 (5) TMI 1452 - AT - Central Excise

Valuation - Physician sample pack (P.S. Pack) - It is the contention of the Revenue that the PS Packs are required to be assessed u/s 4(1)(b) of Central Excise Act, 1944 as the medicines in PS Packs are ultimately distributed free on behalf of the appellant - Held that - the issue is now settled by the Hon ble Supreme Court in their own case reported as Commissioner of C.Ex. &Cus. Surat Vs. Sun Pharmaceuticals Inds. Ltd. 2015 (12) TMI 670 - SUPREME COURT , where it was held that The transaction in question was between the assessee and the distributors. Between them, admittedly, price was charged by the assessee from the distributors. What ultimately distributors did with these goods is extraneous and could not be the relevant consideration to determine the valuation of excisable goods. When we find that price was charged by the assessee from the distributors, the Show Cause Notice is clearly founded on a wrong reason - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Determination of assessable value of Physician Sample Packs under Central Excise Act, 1944.

Analysis:
The case involved an appeal against orders passed by the Commissioner of Central Excise (Appeals) regarding the determination of the assessable value of Physician Sample Packs (P.S. Packs) under the Central Excise Act, 1944. The appellants, engaged in the manufacture of pharmaceutical products, sold P.S. Packs meant for free distribution as samples to physicians. The Revenue objected to the method of determining the assessable value of P.S. Packs, arguing that they should be assessed under Section 4(1)(b) of the Central Excise Act, 1944. Demand notices were issued for recovery of the differential duty based on this contention.

The appellant's advocate highlighted conflicting judgments on the issue and referred to a Supreme Court case Commissioner of C.Ex. &Cus. Surat Vs. Sun Pharmaceuticals Inds. Ltd. to support their argument. The Revenue, represented by the AR, contended that the assessable value should be determined under Section 4(1)(b) of the Act since the goods were distributed free of cost ultimately. The Tribunal carefully considered the submissions and referred to the Supreme Court's judgment in a similar case involving the appellant. The Supreme Court had clarified that the transaction value between the assessee and distributors should be the relevant consideration for determining the assessable value, irrespective of the free distribution aspect.

Based on the Supreme Court's ruling and the principles laid down in the judgment, the Tribunal found no merit in the orders passed by the Commissioner of Central Excise (Appeals). Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential relief as per the law. This decision was made following the Supreme Court's interpretation of Section 4(1)(a) of the Central Excise Act, 1944, emphasizing the importance of the price charged in the transaction between the assessee and distributors for determining the assessable value.