2001 (5) TMI 82 - AT - Central Excise

Summary

Issues: Valuation of medicines cleared as "Physician Samples" for excise duty.

In this judgment, the dispute revolves around the valuation of medicines cleared as "Physician Samples" by the appellant, a manufacturer of P & P medicines. The appellant argues that Physician Samples, marked as "not for sale," should not be subject to excise duty. They contend that Physician Samples differ from normal trade packs in quantity, packaging, and are not marketed. The appellant relies on Supreme Court decisions to support their claim that non-marketable Physician Samples should not be considered goods. Additionally, the appellant argues that the valuation should be based on the cost of production, not the sale price. On the other hand, the Revenue asserts that Physician Samples and trade packs are identical goods, citing a previous Tribunal decision for valuation under Rule 6(b)(i) of the Central Excise Valuation Rules.

The Tribunal rejects the appellant's argument that Physician Samples are not goods. It emphasizes that marketability is a key attribute of goods for excisability, and the samples distributed are identical to the medicines sold. The Tribunal holds that free samples meet the marketability criterion and are liable for excise duty. Additionally, the Tribunal explains the application of Section 4(1)(b) of the Central Excise Act and the Central Excise Valuation Rules, 1975 in cases where goods are not sold, emphasizing the determination of value based on comparable goods.

Regarding valuation, the Tribunal analyzes Rule 6(b) of the Valuation Rules, highlighting that when goods are not sold but distributed freely, valuation based on the cost of production is applicable only if the value cannot be determined based on comparable goods. In this case, as the medicines for sale and free distribution are identical, the Tribunal upholds the valuation based on comparable goods under Rule 6(b)(i). The Tribunal agrees with the Revenue's position and follows the precedent set in the Cheryl Laboratories case, concluding that the appeal is rejected based on the above considerations.