2017 (7) TMI 338 - HC - Central Excise

Refund claim of excess duty paid - valuation of Physician s sample - Board Circular dated 01-07-2007 - where it is well settled that the Board circular would be applicable only prospectively, whether the 1st respondent was correct in directing the authority to follow the Board circular dated 13.02.2003 for the past period? - Held that - the assessable value of the Physician s sample can only be based on the actual cost of production to the assessee. The assessable value, as indicated in the 2002 circular, is 115% of the cost of production. The Tribunal having come to this conclusion, in our opinion ought not to have taken recourse to the 2003 circular - the Tribunal quite clearly, seeks to apply the 2003 circular which adverts to the CAS-4 methodology. Furthermore, as it appears, the Tribunal only to obtain more clarity qua the ascertainment of cost of production has remanded the matter to the Adjudicating Authority - appeal allowed by way of remand.

Summary

Issues:
1. Interpretation of circulars for determining the cost of production for refund claim.
2. Applicability of circulars dated 2002 and 2003 in valuing physician's samples.
3. Adjudication of the assessable value of physician's samples based on cost of production.

Analysis:
1. The appeal involved a dispute regarding the application of circulars for determining the cost of production for a refund claim. The Assessee contended that the Tribunal erred in directing the application of the 2003 circular retrospectively, arguing that it should be applied prospectively. The Assessee also highlighted that the 2003 circular pertained to captively consumed goods, which were different from the physician's samples in question.

2. The Tribunal concluded that the assessable value of physician's samples should be 115% of the cost of production, based on the principles outlined in the 2002 circular. However, the Assessee's representative argued that due to the lack of factory overheads breakdown for certain periods, the Tribunal resorted to the 2003 circular. The Court emphasized that the actual cost of production should be the basis for determining the assessable value, as per the 2002 circular, and not the 2003 circular related to captively consumed goods.

3. The Court held that the Tribunal's decision to apply the 2003 circular for valuation was incorrect. The assessable value of physician's samples should be calculated at 115% of the actual cost of production, as per the 2002 circular. The matter was remanded to the Adjudicating Authority for further processing of the refund claim in line with the principles of the 2002 circular. The judgment favored the Assessee, emphasizing adherence to the correct circular for valuation purposes.

In conclusion, the High Court set aside the impugned order and remanded the matter to the Adjudicating Authority for processing the Assessee's refund claim based on the principles outlined in the 2002 circular. The Court clarified that the assessable value should be 115% of the actual cost of production, specifically for physician's samples. The decision was in favor of the Assessee, and no costs were awarded in the appeal.