Excise valuation of free physicians' samples may follow comparable-goods method on a pro rata basis when market-identical goods exist.

Physicians' samples distributed free of cost are treated as excisable goods, and where normal price-based valuation is inapplicable, valuation may be made under the excise rules by reference to comparable goods. If the samples are identical to market goods and drawn from the same lot, the comparable-goods method can be applied on a pro rata basis; only if that method fails does cost of production or manufacture plus profit apply. Best-judgment valuation may adopt any method contemplated by the earlier rules. The note also records that rectification proceedings had already granted substantial relief, leaving only a limited period in dispute.

---

---

Issues: Whether physicians' samples distributed free of cost by a manufacturer were liable to be valued on a pro rata basis or on the cost basis under the excise valuation rules.

Analysis: The samples were held to be excisable goods, but their valuation had to be determined under the valuation rules because the normal price-based provision was inapplicable. Rule 6(b) permitted valuation first by reference to comparable goods and, only if that method could not be applied, by cost of production or manufacture including profit. Since the samples were identical to the goods sold in the market and were drawn from the same lot, they were comparable goods. Rule 7, which requires best judgment valuation, allowed the proper officer to adopt any of the methods contemplated by the earlier rules, including the comparable-goods method. The Court also noted that the appellant had already obtained substantial relief in rectification proceedings, with the controversy narrowed to a limited period.

Conclusion: The valuation of physicians' samples could be determined by reference to the comparable-goods method on a pro rata basis under the valuation rules, and the appellant obtained partial relief in view of the rectification orders.

---