2009 (2) TMI 671 - AT - Central Excise

Valuation of Physician Samples for Excise Duty

The Tribunal held that physician samples must be valued on a pro rata basis according to the cost of regular commercial packs. It was determined that ... Samples - Excisability of physician’s samples Issues involved: Valuation of physician samples distributed free of cost by the appellant, marketability of physician samples for excisability and dutiability.Valuation of Physician Samples:The appellant conceded that physician samples must be valued on a pro rata basis u/s the cost of regular commercial packs, as per the Tribunal's decisions in previous cases. The appellant did not challenge the valuation method but argued that physician samples are not marketable due to legal prohibitions on their sale.Marketability of Physician Samples:The appellant argued that physician samples cannot be sold due to legal restrictions under the Drugs and Cosmetics Act, making them non-marketable and not excisable. The appellant contended that the prohibition on sale of physician samples means they cannot be brought to the market for sale, even if some units sell them to distributors.Counter Argument:The respondent argued that marketability is based on the capability of goods to be bought and sold, not just their actual sale. Citing legal precedents, it was contended that goods can be considered marketable even if not actively sold in the market.Judgment:The Tribunal held that marketability is a question of fact, and goods need to be capable of being marketed to be considered excisable. The fact that physician samples are not actively sold does not make them non-marketable. The Tribunal rejected the appellant's argument that legal restrictions on sale make physician samples non-marketable, emphasizing that marketability is based on the capability of goods to be sold, not their actual sale.Conclusion:The Tribunal found no merit in the appellant's case and rejected the argument that physician samples are not excisable due to their non-marketability. The judgment was pronounced on 27-2-2009.