Appeal success: Special packing cost for physician's samples included in assessable value

The appeal focused on the sustainability of demanding a differential duty on physician's samples of medicaments cleared by the appellant. The samples were cleared in special packing, leading to a dispute over whether the cost of the packing should be included in the assessable value. The Tribunal ruled in favor of the appellant, citing that the cost of special packing for physician's samples should be included in the price of the regular pack, which covers all expenses for selling the product. Consequently, the appeal was allowed, setting aside the Commissioner (Appeals) order and providing relief to the appellant.

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Issues:
Whether the demand of the differential duty on physician's samples of medicaments cleared by the appellant is sustainable in law.

Analysis:
In this appeal, the main issue is whether the demand of the differential duty on physician's samples of medicaments cleared by the appellant is sustainable in law. The samples were cleared in special packing called catch cover/catch boxes, while identical goods to buyers were sold without such packing. The lower authorities held that the cost of the catch cover should be included in the assessable value of the samples as the artwork on the cover added value to the goods, leading to the duty demand.

The appellant relied on the Drugs Price Control Order (DPCO) 1995 and case law to support their claim. They argued that the price of physician's samples should not exceed the DPCO limit, making it impermissible to include the catch cover cost in the assessable value. Reference was made to the Tribunal's decision in Blue Cross Laboratory case and Softsule Pvt. Ltd. case, where it was established that the assessable value of physician's samples should be determined on a pro rata basis compared to identical goods sold.

The Tribunal considered the submissions and noted that the DPCO did not support the appellant's case as it applied only to retail sales of medicaments. Relying on the Softsule Pvt. Ltd. case, the Tribunal held that the cost of special packing for physician's samples should be included in the price of the regular pack, which covers all expenses for selling the product. Therefore, the cost of packing was already included in the pro rata price calculation based on the regular pack.

Since the issue was squarely covered by the Tribunal's decision in the Softsule Pvt. Ltd. case, the appeal was allowed, and the order of the Commissioner (Appeals) was set aside, providing consequential relief to the appellant.

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