2019 (2) TMI 1426 - AT - Central Excise

Valuation - physician samples cleared by them for free distribution - section 4A of CEA - appellant are manufacturing physician samples on behalf of their loan licensee and selling the same to the loan licensee who further distribute the same free of cost to physicians - Held that - The assessment in the said case need to be done in terms of decision of Hon ble Apex Court in the case of M/s Sun Pharmaceuticals Industries Ltd 2015 (12) TMI 670 - SUPREME COURT where it was held that the assessment in such case is to be done on the basis of transaction value of sale of physician samples from the appellant to the loan licensee. The physician samples manufactured by the appellant on their own behalf are distribute free of cost by the appellant to the physician - Held that - In respect of physician samples cleared by the appellant on their own behalf for free distribution are to be assessed on the basis of the value ascertained for the identical medicine cleared in the open market and assessed under Section 4A of the Central Excise Act. Since the impugned order has not quantified two categories separately, the impugned order is set aside and matter is remanded to the original adjudicating authority to pass afresh order in above terms - appeal allowed by way of remand.

Summary

Issues:
Demand on physician samples cleared for free distribution

Analysis:
The appeal was filed against the order confirming the demand on physician samples cleared for free distribution. The appellant did not appear on multiple occasions, leading to the matter being taken ex-parte. The demand was raised for physician samples cleared by the appellant, both on their own behalf and to loan licensees. The Revenue demanded duty based on MRP prices. The lower authority confirmed the demand, leading to the appeal.

In the first situation, where the appellant manufactured physician samples for loan licensees, the assessment was to be done based on the transaction value of sale from the appellant to the loan licensee. This was in line with the decision of the Hon'ble Apex Court in a specific case. The second situation involved physician samples manufactured by the appellant for free distribution to physicians. The law, as settled by the Hon'ble High Court of Bombay, required these samples to be assessed based on the value ascertained for identical medicine cleared in the open market under Section 4A of the Central Excise Act.

As the impugned order did not quantify the two categories separately, it was set aside. The matter was remanded to the original adjudicating authority to pass a fresh order in line with the assessment principles discussed for both situations. The appeal was allowed by way of remand.