2012 (11) TMI 254 - AT - Central Excise

Demand of duty extended period of limitation alleged that valuation of the physician samples has to be done on the basis of pro-rata value of such goods sold by the assessee i.e. on pro rata basis of MRP of the said products as per the provisions of Rule 4 of Central Excise Valuation Rules Held that - It is not for the assessee to declare in their monthly returns whether the duty on such clearances of physician samples was being paid on prorata basis of value of MRP of the identical goods or otherwise but it was for the assessee to indicate the assessable value of the said goods - assessable value which has been worked out by him was correct. Having filed the monthly returns regularly with the authorities and the authorities having not raised any question on the issue of assessable value, appellant has not suppressed any material facts or vital information from the department - appeal filed by the assessee allowed - order set aside.

Summary

Issues:
Valuation of physician samples for duty liability under Central Excise Act, 1944; Invocation of extended period for demand of duty; Applicability of Section 4 for valuation; Interpretation of transaction value for physician samples; Compliance with monthly returns and limitation period for raising demands.

Analysis:

Valuation of Physician Samples:
The appeal concerned the valuation of physician samples for duty liability under the Central Excise Act, 1944. The appellant manufactured excisable goods and physician sample packs, with differing duty liabilities based on sale packs and physician samples. The lower authorities contended that physician samples should be valued on a pro-rata basis of MRP, invoking a show cause notice for differential duty, interest, and penalty. The appellant argued for valuation based on the cost construction method and transaction value, citing a Tribunal case precedent and compliance with invoice pricing.

Applicability of Section 4 and Transaction Value:
The appellant asserted that for physician samples sold to principals, the assessable value declared and duty discharged were correct, following a Tribunal precedent upheld by the Apex Court. The Tribunal concurred, upholding the transaction value method over pro-rata valuation, as the factual position and contractual obligations were not disputed by the Revenue.

Compliance and Limitation Period:
Regarding physician samples of the appellant's own products, the Tribunal aligned with the Revenue, citing a Larger Bench decision for valuation. However, on the question of limitation, the Tribunal found in favor of the appellant. Monthly returns clearly indicated details of physician samples, and the absence of queries from authorities indicated no suppression of facts. The Tribunal deemed the demand time-barred, setting aside the order on both merit and limitation grounds.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order partially on merits and entirely on limitation, emphasizing the importance of compliance with reporting requirements and the Revenue's responsibility to query assessable values promptly. The judgment clarified the valuation method for physician samples, upheld transaction value principles, and highlighted the significance of timely enforcement actions within the limitation period.