2014 (12) TMI 540 - AT - Central Excise

Manufacturer wins assessment dispute over physician samples, transaction value prevails

Hetero Labs Limited Versus Commissioner of Customs, Central Excise and Service Tax HYDERABAD-IV

The Tribunal ruled in favor of the appellant, a manufacturer of medicaments, in a dispute over the assessment of physician samples. The Tribunal held that ... Waiver of pre deposit - assessment of physician samples - Valuation on basis of transaction value or MRP basis - Held that:- It is a fact that according to the submissions of the appellant, the physician samples are sold as per the purchase orders issued by different firms / persons. The physician samples are not distributed by the appellants themselves to the doctors or anybody else free of cost. Therefore as rightly submitted by the appellants, the decision in the case of Cadila Pharmaceuticals [2008 (9) TMI 98 - CESTAT AHEMDABAD] would not be applicable since in that case the appellants were distributing the medicaments as free samples to physicians. In this case the free samples are not required to be affixed with MRP and are not affixed with MRP and have been sold on the basis of purchase orders to different firm and persons. - appellants have made out a prima facie case - Stay granted. Issues: Assessment of physician samples based on transaction value vs. MRP.Analysis:The appellant, a manufacturer of medicaments, sells regular retail packages affixed with MRP. The dispute arose regarding the assessment of physician samples. Lower authorities relied on a previous Tribunal decision in a similar case to assess physician samples based on the MRP of retail packages sold. The appellant, although not present in person, submitted a written memorandum citing a different Tribunal case where transaction value was upheld for physician samples, a decision also supported by the Supreme Court. The Tribunal noted that the physician samples were sold as per purchase orders, not distributed for free, making the previous Tribunal decision inapplicable as it involved distribution as free samples. Thus, the Tribunal found the appellant's reliance on the transaction value assessment valid for physician samples sold based on purchase orders to different firms and persons. Consequently, the Tribunal granted a complete waiver of predeposit and stay against recovery of the dues during the appeal process.