2016 (8) TMI 844 - AT - Central Excise

Valuation - physician samples - regular trade packs are being cleared on payment of duty in terms of section 4A of the Central Excise Act. Also selling of physical samples not marked with any MRP to M/s. Sanat Products who is further distributing the same free of cost - appellants have paid duty on the transaction value of the said samples whereas Revenue is of the view that same have to be assessed on pro rata basis by taking into consideration the MRP of the regular trade packs - Held that - the issue is no more res integra and stand settled in favour of the assessee by Hon ble Supreme Court decision in the case of CCE Surat vs. Sun Pharmaceuticals Indus Ltd. 2015 (12) TMI 670 - SUPREME COURT . It stand held that in the absence of any allegation of price at which the samples were being sold by the assessee to the distributor the value of said samples has to be sale price of the goods. The fact that distributor further distributed the sample free of cost is irreverent to determine the value of physician samples. - Decided in favour of appellant with consequential relief

Summary

Issues: Valuation of physician samples for excise duty assessment

Analysis:
1. Issue of Valuation: The dispute revolves around the valuation of physician samples sold by the appellants to their distributor, M/s. Sanat Products Ltd. The Revenue contends that the samples should be assessed on a pro rata basis by considering the Maximum Retail Price (MRP) of the regular trade packs. On the contrary, the appellants argue that the transaction value should be considered as the assessable value, as the sale is on a principle-to-principle basis. The lower authorities rejected the appellants' plea, citing that the samples were distributed for free by the buyer.

2. Legal Precedent: The Tribunal refers to the decision of the Hon'ble Supreme Court in the case of CCE, Surat vs. Sun Pharmaceuticals Indus Ltd. The Supreme Court ruling established that in the absence of evidence regarding the price at which the samples were sold by the assessee to the distributor, the value of the samples should be based on the sale price of the goods. The fact that the distributor distributed the samples for free does not impact the valuation of physician samples.

3. Judgment: Considering the settled legal position based on the Supreme Court decision, the Tribunal sets aside the impugned order and allows the appeal in favor of the appellant. The Tribunal holds that the value of physician samples should be determined based on the sale price of the goods, irrespective of the subsequent distribution by the buyer. The decision provides consequential relief to the appellant, concluding the matter in their favor.

This detailed analysis of the judgment highlights the key issues surrounding the valuation of physician samples for excise duty assessment, the legal precedent established by the Supreme Court, and the final decision rendered by the Tribunal in favor of the appellant based on the settled legal position.