2016 (7) TMI 555 - AT - Central Excise

Valuation - inclusion of extra packing charges which is in the form of catch covers - valuation of physician samples - Held that - the appellant has valued the physician sample based upon pro rata basis with the comparable goods available, the comparable goods being sale pack of the physician sample. - Following the decision in the case of Medley Pharmaceuticals vs. CCE, Daman 2011 (1) TMI 13 - SUPREME COURT OF INDIA decided in favor of assessee.

Summary

Issues Involved:
Valuation of physician samples for central excise duty during April 1996 to March 2000.

Detailed Analysis:
1. Valuation Dispute: The issue in this case revolves around the valuation of physician samples for central excise duty. The appellant, a pharmaceutical goods manufacturer, clears physician samples to promote their business and values them on a pro rata basis of the sale pack cleared by them. The dispute arises from the non-inclusion of the value of extra packing charges, specifically catch covers, in the valuation. The lower authorities confirmed demands, imposed penalties, and the first appellate authority upheld the decision.

2. Appellant's Submission: The appellant argued that the cost of extra packing is already included in the pro rata price of the regular pack, leading to regular taxation. They also contended that there was no mala fide intention as they discharged duty liability as per their understanding. The demand invoking an extended period was deemed incorrect by the appellant.

3. Revenue's Argument: The departmental representative argued that the extra cost of packing material and catch cover was not included in the valuation for discharging duty liability. Citing a Supreme Court case, the representative advocated for applying the best judgment method for valuation.

4. Tribunal's Decision: After considering both sides' submissions, the Tribunal found in favor of the appellant for several reasons. Firstly, the value of catch covers being included in the sale pack's value was not disputed. Secondly, a previous ruling in favor of the appellant's sister unit was noted. Thirdly, the Tribunal found no intent to evade duty as duty liability was discharged on a pro rata basis.

5. Legal Precedent: The Tribunal discussed a Supreme Court case regarding the valuation of physician samples. The apex court had emphasized that valuation should be done on a pro rata basis, and the best judgment method under Rule 7 of the Valuation Rules could be applied. The Tribunal applied this legal principle to the appellant's case, where valuation based on pro rata basis with comparable goods was deemed appropriate.

6. Conclusion: In light of the judicial pronouncements and the specific circumstances of the case, the Tribunal held the impugned order to be unsustainable and set it aside, allowing the appeal with consequential relief.

This detailed analysis outlines the valuation dispute, the arguments presented by both parties, the legal precedent considered, and the Tribunal's decision in favor of the appellant based on the specific facts and legal principles involved in the case.