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TMI Blog2015 (9) TMI 312X X X X Extracts X X X X X X X X Extracts X X X X ..... ious kinds of medicines. Apart from selling the medicines in the market, some medicines are distributed to the physicians as samples for which the appellant is not charging any amount from those physicians. To put it otherwise, these are distributed free to the physicians. The question which has arisen in the present appeals is the valuation of these samples. We may mention at the outset that even when these samples are distributed free to the physicians, they are exigible to the excise duty. These issues have already been settled by various judgments of this Court, the latest one being CCE, Bangalore I vs. Bal Pharma Limited, Bangalore and Ors. (2011 (2) SCC 601). Because of this reason Mr. Lakshmikumaran, learned counsel appearing for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... samples have to be valued on pro rata basis for the relevant period." Mr. Lakshmikumaran, learned counsel pointed out that while arriving at the aforesaid conclusion, the Court took into consideration its decision in Bal Pharmaceutical Ltd.. He took us through the judgment of Bal Pharmaceutical. A perusal thereof would demonstrate that there were two sets of appeals which were decided in the said decision. In the first set of appeals the Court took note of the Tribunal's judgment in CCE, Calicut vs. Trinity Pharmaceuticals P. Ltd. (2005 (188) ELT 42 (Tri)) and with the observations that the said decision of the Tribunal was accepted by the Revenue, appeal of the Revenue was dismissed. There is no discussion of the Tribunal's deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured by the assessee or by any other assessee: Provided that in determining the value under this sub-clause, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors and, in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods; (ii) if the value cannot be determined under sub-clause (i), on the cost of production or manufacture including profits, if any, which the assessee would have normally earned on the sale of such goods." Even Rule 6 does not apply as that Rule is applicable only in those cases where such goods are either sold by the assessee in retail or are used or consumed by him or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re identical. In fact out of the same lot manufactured some are distributed as samples. Therefore, even while exercising his power under Rule 7 the proper officer can chose any of the aforesaid two methods prescribed in Rule 6(b) of the Rules. No doubt it is the discretion of the proper officer to determine the value as it is his best judgment which he has to exercise. However, the Rule also mentions that while exercising his best judgment, he has option to give regard to any of the methods, prescribed in the earlier rules. The words `among other things' would indicate that regard can be to other material also which is produced. Thus while exercising his discretion as to which method is most suitable in a given situation, the proper off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 1.7.2000. This plea of the assessee has been accepted by the CESTAT vide its order dated 4.1.2006 thereby allowing the appeal partly. In the circular dated 1.7.2002 some of the points of dispute have been clarified. Doubt No.13 with which we are concerned, and the clarification thereto reads as under: How will valuation of samples be done which are distributed free, as part of marketing strategy, or as gifts or donations? Since the goods are not sold Section 4(1)(a) will not apply and recourse will have to be taken to the Valuation Rules. No specific rule covers such a contingency. Except Rule 8 all the other rules cover contingencies where sale is involved in some form or the other. Therefore, the residuary rule 11 will ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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