2013 (12) TMI 390 - AT - Central Excise

Valuation of Free samples - Free samples cleared without paying duty on MRP basis Held that - In respect of physician s sample being manufactured by job worker and sold to the principal manufacturer, valuation is to be done as per UJAGAR PRINTS ETC. ETC. Versus UNION OF INDIA & OTHERS 1989 (1) TMI 124 - SUPREME COURT OF INDIA judgement of Apex Court - Appellant s are not assessing duty as envisaged in Ujagar Print s case, which requires specifying cost of all the raw materials, packing material supplied by the principal manufacturer, job charges and profit element - Principal manufacturer on his own dictating the assessable value to be declared - This has come out clearly in the statement mentioned by the appellant has not rebutted the same - Even Ld. Advocate is claiming that they are declaring value as per CAS-4 - CAS-4 valuation scheme is applicable for goods meant for capative consumption, which is not the case here. The transaction between appellant and principal manufacturer cannot be considered as on principal to principal basis - the only way left is to assess the value based upon M.R.P. of similar goods after giving abatement as prescribed and on proportionate basis - This is what has been ordered by Commissioner (Appeals) Decided against Assessee.

Summary

Issues: Valuation of physician's samples for excise duty - Applicability of Ujagar Prints case - Principal to principal basis of transaction.

Analysis:
The case involved the manufacturing of P&P medicaments as loan license/jobwork basis for certain pharmaceutical companies. The dispute arose regarding the valuation of physician's samples for excise duty purposes. The appellant contended that the valuation should be based on the cost of raw material, job charges, and profit as per the Ujagar Prints case. They claimed to be paying duty on 110% of the cost of production basis. The appellant cited various tribunal judgments supporting their position. However, the Department argued that the transaction was not on a principal to principal basis, as the value of physician's samples was dictated by the principal manufacturer, not based on Ujagar Prints case. The Department relied on a statement by an officer of the appellant confirming this practice.

The Tribunal considered both arguments and the case laws cited by the appellant. While acknowledging the consistent view of the Tribunal on valuation based on the Ujagar Prints case for physician's samples sold to principal manufacturers, the Tribunal noted that in this case, the appellant was not following the Ujagar Prints criteria. The appellant did not specify the cost elements as required by Ujagar Prints but relied on the value dictated by the principal manufacturer. The Tribunal found that the transaction was not on a principal to principal basis, as claimed by the appellant. The appellant's use of CAS-4 valuation scheme, meant for captive consumption goods, was deemed inappropriate. Therefore, the Tribunal upheld the Commissioner (Appeals)'s order to assess the value based on M.R.P. of similar goods after abatement and on a proportionate basis, dismissing the appeal.

In conclusion, the Tribunal ruled that the valuation of physician's samples for excise duty should not be based on the Ujagar Prints case criteria as the transaction was not on a principal to principal basis. The appellant's reliance on CAS-4 valuation scheme was deemed unsuitable, leading to the affirmation of the Commissioner (Appeals)'s valuation method based on M.R.P. with abatement.