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TMI Blog2023 (9) TMI 1278X X X X Extracts X X X X X X X X Extracts X X X X ..... ng recourse to price at which goods are sold at the nearest time of removal. The facts and circumstances of each removal and the nature of the transaction with the recipient of such clearances will determine the specific provision in Central Excise (Determination of Price of Excisable Goods) Rules, 2000 that must be applied. It would be in the fitness of things for such detailed scrutiny to be undertaken by the original authority. The impugned order is modified and the terms of remand to the original authority altered accordingly. - MR C J MATHEW, MEMBER (TECHNICAL) AND MR AJAY SHARMA, MEMBER (JUDICIAL) Shri Suyog Bhave, Advocate for the appellant Shri Xavier Mascarenhas, Superintendent (AR) for the respondent ORDER The issue in this dispute of M/s Maneesh Pharmaceuticals Ltd, viz. valuation of physician samples , against order [order-in-appeal no. BPS/140-145/LTU/MUM/2012 dated 18th December 2012] of Commissioner of Central Excise Service Tax (Appeals), Mumbai Zone-I, and peculiar to the pharmaceutical industry, has been a subject of controversy stretching back in time. Indeed, from the operative portion of the impugned order, it would appear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. 16. The Respondent Deputy Commissioner of Central Excise shall re-quantify and recover the demands of differential duty, if any, along with interest leviable thereon, by applying the above yardsticks in determining the value of the physicians' samples cleared by the Appellants during the periods under reference. 17. Since the issue involved is regarding correct interpretation of the statute and Valuation Rules made there under and there have been divergent views expressed by various Judicial Foras, I do not consider it a fit case for imposition of any penalty on the Appellants under Rule 25 of the Central Excise Rules, 2002. 3. The issue itself has seen several twists and turns, in departmental clarification and through judicial decisions, that, at its root, has a simple formulation: replica of dutiable goods are removed from factory for free distribution to medical practitioners with the cost thereof implicitly included in the valuation of the goods removed on payment of duty into an exclusive and regulated distribution channel. For long, and with administrative approval, physician samples were treated as goods that are captively consumed and valued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of Rule 4. Besides, it is to be kept in mind that the Bombay High Court was seized of a legal issue in the context of challenge to the validity of a circular issued on 25-4-2005, that is, in the aftermath of the notification under Section 4A(1). 31. In view of the above discussions, I am of the opinion that notwithstanding the non-availability of the normal sale price under Section 4(1)(a) of the Act, by reason of the goods being specified under Section 4A(1) making the retail sale price i.e. MRP as its deemed value, the appropriate rule governing the valuation of physician s samples would continue to be Rule 4 and the decision of the Larger Bench in Blue Cross Laboratories Ltd. s case (supra) mutatis mutandis continues to be good law. The reference is accordingly answered in the affirmative in favour of the Revenue and against the appellant/assessee. 6. In Commissioner of Central Excise Customs, Surat v. Sun Pharmaceuticals Industries Ltd [2015 (326) ELT 3 (SC)], the Hon ble Supreme Court held that 10. As mentioned above, the assessee had put up the defence that since physician samples were not meant for sale by distributors but were to be given free of cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that] it is physician samples, the valuation shall be governed by Section 4 of the Central Excise Act. In case of job work, the value should be in terms of principles laid down by the Hon ble Supreme Court in the case of Ujagar Prints - 1989 (39) E.L.T. 493 (S.C.). Accordingly, the valuation shall be determined on the basis of cost of raw material + job charges including the profit of the job worker. It is not the case of the Revenue that the value determined by the appellant is less than the value to be arrived at on the principles of Ujagar Print s case. 5.2 As regards the physician samples manufactured and sold by Okasa Pvt. Ltd. to their principal, the transaction is on principal to principal basis. Therefore, whatever goods were sold by the appellant to their principal is correct transaction value in terms of Section 4. In both type of clearances in any circumstances, Rule 4 valuation shall not apply. 7. We also take note that the facts and circumstances of each clearance of physician s samples undertaken by the appellant must determine the applicability of the appropriate rule in Central Excise (Determination of Price of Excisable Goods) Rules, 2000. The orders o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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