Valuation of free physician samples follows Rule 4 read with Rule 11, not Rule 8 or MRP-based valuation.

Free physician samples of medicines, though not sold and cleared without MRP, are to be valued under Rule 4 read with Rule 11 of the Central Excise Valuation Rules where transaction value is unavailable. Rule 8 does not apply because it is confined to goods used or consumed in the production or manufacture of other articles, not samples distributed free to doctors. Section 4A is also inapplicable because the samples are not sold on an MRP basis. The valuation must therefore follow the price of comparable goods sold at or nearest to the time of removal, with reasonable adjustments consistent with the rules.

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Issues: Whether free physician samples of medicines, which are not sold and are cleared without MRP, are to be valued under Rule 4 read with Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, and whether valuation under Rule 8 or Section 4A of the Central Excise Act, 1944 is applicable.

Analysis: Free physician samples are not sold at the time and place of removal, but they are identical or substantially similar to the medicines sold in the market. The valuation framework under Section 4(1)(b) requires recourse to the valuation rules where transaction value is unavailable. Rule 8 is confined to goods not sold but used or consumed in the production or manufacture of other articles, which does not cover physician samples distributed free to doctors. Rule 4 is the general rule applicable where goods are not sold at removal, and it permits valuation on the basis of the price of such goods sold at or nearest to the time of removal, with suitable adjustments. Rule 11 permits reasonable means consistent with the principles of the rules where valuation cannot be determined under the specific rules. On that basis, Rule 4 read with Rule 11 is the proper method. Section 4A is inapplicable because the samples are not sold on an MRP basis.

Conclusion: The physician samples were correctly liable to valuation under Rule 4 read with Rule 11, and the assessee's challenge to the demand failed.

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