2017 (10) TMI 131 - AT - Central Excise

Valuation - physician samples - Job-work - when the manufacturer as a job worker and manufacturing physician samples for the principal, whether the valuation would be governed by Rule 8 of Central Excise Valuation Rules, 2000 or otherwise? - Held that - the appellant is engaged in the manufacture of physician sample and supplied to their principal on job work basis by charging the job charges. In this fact the transaction of goods between the manufacturer and the principal is of deemed sale and since there is no actual sale involved the valuations will be governed by Rule 8 of Central Excise Valuation Rules, 2000 - On the identical set of facts, this Tribunal has decided the matter in the case of Cosmo Remedies 2016 (4) TMI 323 - CESTAT MUMBAI wherein it was held that it is not open to the revenue to demand duty on the value arrived at in terms of rule 4 of the Central Excise Valuation rules - demand set aside - appeal allowed - decided in favor of appellant.

Issues involved:
Valuation of physician samples manufactured by a job worker for the principal manufacturer under Central Excise Valuation Rules, 2000.

Analysis:

Issue 1: Valuation under Rule 8 of Central Excise Valuation Rules, 2000
The main issue in this case was whether the valuation of physician samples manufactured by a job worker for the principal manufacturer would be governed by Rule 8 of the Central Excise Valuation Rules, 2000. The Tribunal considered the fact that the appellant was engaged in manufacturing physician samples for the principal on a job work basis. It was noted that the transaction between the manufacturer and the principal was deemed a sale, and since there was no actual sale involved, the valuation would be governed by Rule 8 of the Central Excise Valuation Rules, 2000. The Tribunal referred to a previous decision in the case of Cosmo Remedies where it was held that valuation of physician samples being manufactured by a job worker and sold to the principal manufacturer should be done as per the Ujagar Print's judgment of the Apex Court. The Tribunal emphasized that the peculiar circumstances of the case led to a different view being taken.

Issue 2: Application of Ujagar Print's judgment
The Tribunal further discussed the application of the Ujagar Print's judgment in determining the valuation of physician samples manufactured by a job worker for the principal manufacturer. It was highlighted that the appellant was not clearing the physician samples to the Physician/Doctor free of cost but on a transaction value arrived at after including the cost of raw materials and job charges as per the Ujagar Print's judgment. The Tribunal referred to the Themis Laboratories Pvt. Ltd. case, stating that if the manufacturer clears the physician samples to the brand owner on a transaction value, then the transaction value is the assessable value. Following this ratio, the Tribunal held that the appellant had correctly valued their product based on the cost of raw material inputs and job charges, setting aside the impugned order and allowing the appeal.

Conclusion
Based on the above analysis, the Tribunal allowed the appeal, emphasizing that the Revenue could not demand duty on the value arrived at in terms of Rule 4 of the Central Excise Valuation Rules. The decision was in line with previous judgments and the principles established in the Ujagar Print's judgment, ensuring the correct valuation of physician samples manufactured by a job worker for the principal manufacturer.

This detailed analysis of the judgment highlights the key issues involved, the application of relevant legal principles, and the final decision rendered by the Tribunal.

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