Transaction value for sold physician samples governs valuation, and full disclosure in returns defeats extended limitation.

Physician samples actually sold to principals are assessable on the declared transaction value under Section 4 when the sale contracts are undisputed and the declared value is not rejected; pro rata revaluation based on sale-pack MRP is not justified. The article also notes that where the assessee disclosed the samples, quantities, assessable value, and duty payable in monthly returns accepted by the department, suppression or mis-declaration is not established. On those facts, the extended period of limitation cannot be invoked, and the demand is time-barred.

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Issues: (i) Whether physician samples sold by the assessee to principals were to be valued on the transaction value declared by the assessee or on a pro rata basis of the sale-pack MRP. (ii) Whether the demand was barred by limitation for alleged suppression or mis-declaration in the monthly returns.

Issue (i): Whether physician samples sold by the assessee to principals were to be valued on the transaction value declared by the assessee or on a pro rata basis of the sale-pack MRP.

Analysis: The samples sold to principals were cleared under contractual arrangements, the declared transaction value was not rejected, and the Revenue had not challenged the contracts or the factual position that the goods were sold. In such circumstances, the earlier decision holding that sold samples are assessable under Section 4 applied. The Tribunal also noted that the Supreme Court had dismissed the Revenue's appeal in that matter, reinforcing the same valuation approach for such sales.

Conclusion: The physician samples sold to principals were correctly assessed on the declared transaction value, and recalculation on a pro rata MRP basis was not justified.

Issue (ii): Whether the demand was barred by limitation for alleged suppression or mis-declaration in the monthly returns.

Analysis: The assessee had disclosed the physician samples, their quantities, assessable value, and duty payable in the monthly returns, which were accepted by the department without objection. Since the assessable value had been disclosed, the assessee was not required to additionally state the valuation method in the returns. On those facts, suppression of material facts or vital information was not made out, and the extended period could not be invoked.

Conclusion: The demand was time-barred and the extended period of limitation was not available to the Revenue.

Final Conclusion: The appeal succeeded, the demand was set aside, and the assessee obtained relief both on valuation for sold physician samples and on limitation.

Ratio Decidendi: Where physician samples are actually sold and the transaction value is disclosed and not rejected, valuation must follow Section 4; disclosure of clearances and assessable value in accepted returns negatives suppression and bars invocation of the extended period.

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