9911796707
TMI Blog2008 (7) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Parameswaran, learned advocate for the Respondent. 3. We heard both sides. 4. The Respondent cleared physician samples which were not for sale, by arriving at the assessable value on cost construction basis from 21-1-2003 onwards. The Central Board of Excise and Customs had issued certain Circulars dated 1-7-2002 and 25-4-2005 for valuation of the free samples. In terms of the Circular dated 25-4-2005, the valuation of the free samples has to be determined in accordance with Rule 4 of the Central Excise Valuation Rules. Revenue, proceeded against the Respondent in respect of the valuation of the physician samples cleared by them free of cost. Consequently, there was a proposal to demand duty of Rs. 1,46,596/- and Rs. 2,932/- Education Cess with interest. There was also a proposal to impose penalty. The Original Authority confirmed the demand mentioned in the show cause notice for the period from 25-4-2005 to 31-10-2005 under Section 11A of the Central Excise Act. He confirmed the payment of interest also under Section 11AB, however, no penalty was imposed. 4.1 The Respondents appealed to the Commissioner (A). The Commissioner (A) after a very detailed discussion of the issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t also observed that assuming that the petitioners are right in contending that the valuation of the physicians samples cannot be determined under any of the specific rules, even then, as per Rule 11 the value of physicians samples has to be determined by using reasonable means consistent with the principles and the general provisions of 2000 Rules and Section 4(1) of the Act. Rule 4 is the only general rule and, therefore, it is just and proper to hold that the valuation of physicians samples be determined under Rule 11 read with Rule 4 and such a valuation would be reasonable and consistent with the principles and general provisions of the Rules and the Act. The contention that the physicians samples must be valued under Rule 11 read with Rule 8 cannot be accepted because Rule 8 applies to cases where the goods are not sold but are captively consumed whereas, goods similar to physicians samples are in fact sold in the open market and in fact are not cleared for captive consumption. Hence, the valuation of physician samples cannot be determined under Rule 11 read with Rule 8 of the 2000 Rules. 4. The Commissioner (Appeals) has relied on the decision of the Hon. CESTAT (LB) in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to affix the MRP on the samples and therefore, Section 4A would not at all be applicable. 6.1 It was also pleaded that in terms of Board's Circular dated 28-2-2002 there was a very detailed clarification in respect of valuation to be adopted in respect of goods notified under Section 4A of the Central Excise Act. In terms of the Circular dated 25-4-2005, the valuation of the samples which are to be distributed free as part of marketing strategy or as gifts or as donations should be determined under Rule 4 of the Central Excise Valuation Rules, 2000 and according to the Revenue, this Circular has been upheld by the Hon'ble Bombay High Court. Revenue has not made out a case that the Hon'ble Bombay High Court has decided that the valuation adopted in case of physician sample should be based on Section 4A price and such a contention has not been made. The Bombay High Court has only upheld the Board's Circular dated 25-4-2005 which says that the valuation has to be adopted in terms of Rule 4. In the case of physician samples, the Commissioner (A) has reasoned that the same is not sold and whatever is sold, the value is done in accordance with Section 4A. However, when the physician sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 It is not the contention of the Department or the Revenue that the respondent is receiving consideration in any form with regard to the physician samples distributed free. In the absence of the same, the question of considering the said clearance of physician sample as falling within the ambit of 'sale and purchase' would be totally irrelevant and cannot be justified. 6.6 It was strongly urged that the provisions of Rule 4 of the Valuation Rules could have been prima facie applied only if any value of such goods sold is available under Section 4 method of valuation and in the absence of any such value being available, the question of resorting to provisions of the said Rule 4 would itself prima facie not arise at all. 6.7 Further, it was stated that the Hon'ble High Court of Bombay in the case cited by the Revenue has only upheld the validity of the Circular dated 25-4-2005 but did not consider the aspect of value of comparable goods, as determined and available under Section 4A being adopted for valuation of physician samples under the said Rule 4 thereof. Therefore, the same cannot be used against the Respondents. 6.8 It was also argued by quoting the following from the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
