2011 (4) TMI 404 - AT - Central Excise

Tribunal rules on valuation of physician samples in Central Excise Act appeal

Softsule Pvt Ltd. Versus Commissioner of Central Excise, Mumbai-III

The Tribunal allowed the assessee's appeal, rejected the Revenue's appeal, and disposed of the cross objection filed by the assessee. The decision was ... Demand - Valuation - Physician samples - Whether the goods (medicaments) manufactured by the assessee, which are in nature of physician samples should be assessed to Central Excise duty on the basis of value of comparable goods i.e. sale pack of medicines under Section 4A of the Central Excise Act, 1944 read with Rule 4 of the Central Excise Valuation Rules, 2000 should be assessed on the basis of transaction value as per the Section 4 (1) (a) of the Act or under cost construction method - Physician samples were cleared by the appellant on principle to principle basis on a transaction value, which was admissible at the time of clearance of the physician samples, than the transaction value is to be determined as per Section 4(1)(a) of the Act - As per the Tribunal in the case of Themis Laboratories Pvt Ltd., vide order No.A/187 to 189/2011/EB/C-II, the issue is decided in favour of assessee - It is held that the appellants have correctly valued the physician samples cleared by them on transaction value/as per CAS-4 - Decided in favour of assessee. Issues involved:1. Correct assessable value determination for physician samples cleared by the assessee.2. Application of Central Excise Valuation Rules and relevant provisions of the Central Excise Act, 1944.3. Appeal against duty demands, penalties, and interest by both the assessee and the Revenue.4. Interpretation of Section 4 (1) (a) of the Central Excise Act, 1944 in relation to physician samples.Detailed Analysis:Issue 1: The case involves the determination of the correct assessable value for physician samples cleared by the assessee. The assessee cleared physician samples on payment of Excise duty based on the cost of raw materials, which was lower than the assessable value for goods cleared in the normal course of trade. The Revenue contended that the assessable value of physician samples should be based on comparable goods cleared in normal trade. A show-cause notice was issued, and duty demands were confirmed, leading to appeals by both parties.Issue 2: The Tribunal considered the application of Central Excise Valuation Rules and the Central Excise Act, 1944. It was observed that the assessable value of physician samples should be determined in accordance with Rule 4 of the Valuation Rules, as the assessee also cleared similar goods in the normal course of trade. The Tribunal analyzed previous cases to establish the correct method of valuation for physician samples, emphasizing compliance with Section 4 (1) (a) of the Act.Issue 3: Both the assessee and the Revenue appealed against duty demands, penalties, and interest. The assessee argued that the impugned order confirming the duty should be set aside based on previous Tribunal decisions in favor of the assessee. The Revenue reiterated its grounds of appeal, leading to a detailed hearing where both sides presented their arguments.Issue 4: The interpretation of Section 4 (1) (a) of the Central Excise Act, 1944 was crucial in determining the assessable value of physician samples. The Tribunal referred to previous cases to establish that when goods are sold for delivery at the time and place of removal, and the price is the sole consideration, the assessable value should be the transaction value. The Tribunal held that the samples were not distributed free but cleared on receipt of consideration, leading to the conclusion that excise duty should be payable on the transaction value.In conclusion, the Tribunal allowed the assessee's appeal, rejected the Revenue's appeal, and disposed of the cross objection filed by the assessee accordingly. The decision was based on the correct valuation of physician samples on a transaction value basis, in compliance with Section 4 (1) (a) of the Central Excise Act, 1944.