Comparable goods valuation applies to free physician samples where samples match saleable medicaments in quality and nature.

Free physician samples of ayurvedic medicaments were held to be valued by reference to comparable goods manufactured and sold by the same assessee, because the samples were identical in quality and nature to the saleable products and differed only in quantity. On those facts, valuation based solely on cost of production was rejected as an inadequate measure, and Rule 6(b)(ii) was not accepted as the proper basis. The assessable value was therefore restored on the comparable-goods method, and the assessee's valuation was disallowed.

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Issues: Whether the assessable value of free physician samples of ayurvedic medicaments was to be determined on the basis of the cost of production or by reference to comparable goods manufactured and sold by the assessee.

Analysis: The samples were identical in quality and nature to the medicaments sold by the assessee, the only difference being quantity. In such circumstances, a valuation method based on the value of comparable goods manufactured by the same assessee was treated as a closer approximation than valuation based merely on cost of manufacture. Rule 6(b)(ii) was therefore not accepted as the proper basis on the facts of the case.

Conclusion: The assessable value could not be fixed on the basis of cost of production alone and had to be determined by reference to comparable goods; the assessee's valuation was rejected.

Final Conclusion: The order of the lower appellate authority was set aside and the valuation adopted by the department was restored.

Ratio Decidendi: Where free samples are identical in quality and nature to goods sold by the assessee, their value should ordinarily be determined by reference to comparable goods rather than by cost of manufacture alone.

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