2017 (2) TMI 309 - AT - Central Excise

Valuation - physician samples manufactured and supplied either on loan license basis or on job-work basis - Section 4 of the Central Excise Act apply or not? - Held that - Rule 4 of Central Excise Valuation Rules, 2000 shall apply only in those cases where the manufacturer manufacturing the physician samples and they themselves supplying free sample in the market - In the present case, all the three appellants are not supplying physician samples free of cost either in case of job-work basis or in the sale basis, the goods are sold to the principal. In such case, irrespective it is physician samples, the valuation shall be governed by Section 4 of the Central Excise Act. The valuation shall be determined on the basis of cost of raw material job charges including the profit of the job worker. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Valuation of physician samples manufactured and supplied on loan license basis or job-work basis.

Analysis:
The issue in the present appeals pertains to the valuation of physician samples manufactured and supplied either on a loan license basis or on a job-work basis. The Department contended that valuation should be done under Rule 4 of the Central Excise Valuation Rules, 2000, based on Board's Circular. The Department upheld a differential duty demand, which was confirmed by the Commissioner (Appeals).

In response, the appellant argued that they are not the owners of the goods and are not supplying physician samples free of cost in the market. For cases where the samples were manufactured on a job-work basis, the appellant emphasized that there is a deemed sale value, and duty is paid on such value. The appellant relied on various judgments to support their argument.

The Revenue, on the other hand, reiterated the findings of the impugned order and emphasized the Board's Circular stating that the value should be determined under Rule 4 of the Central Excise Valuation Rules, 2000. The Revenue also cited judgments to support their stance.

Upon considering the submissions of both parties, it was observed that all three appellants were manufacturing physician samples on behalf of buyers, either on a job-work basis or a principal-to-principal basis. Hence, the valuation of physician samples in this case is not applicable under Rule 4 of the Central Excise Valuation Rules, 2000. The valuation should be governed by Section 4 of the Central Excise Act, and in the case of job-work, it should be determined based on the principles established by the Supreme Court. The Tribunal found that the valuation proposed by the Revenue for all three appellants was incorrect, and the demands based on that valuation were not sustainable. Therefore, the impugned orders were set aside, and the appeals were allowed.