2018 (12) TMI 550 - AT - Central Excise

Appellate Tribunal rules on valuation of Physician Samples. Precedent of cost of raw material + job charges upheld.

M/s Swiss Pharma Pvt. Ltd. Versus C.C.E. – Ahmedabad-i

The Appellate Tribunal CESTAT AHMEDABAD ruled in favor of the appellant in a case concerning the valuation of Physician Samples manufactured on a job work ... Method of Valuation - Physician Sample of medicament manufactured on job work basis for the principal and cleared the same to the principal - whether valued u/s 4 or u/s 4A of CEA - Held that:- It has been held that in case of Physician Sample manufactured on job work basis, the valuation should be done on the cost of raw material plus job charges as held by the Hon’ble Supreme Court in the case of Ujagar Prints [1989 (1) TMI 124 - SUPREME COURT OF INDIA] - the proposal of valuation by the Revenue that it should be on pro rata value of Section 4A of trade pack is not correct and legal - appeal allowed - decided in favor of appellant. Issues involved: Valuation of Physician Sample of medicament manufactured on job work basis for the principal and cleared to the principal - whether to be valued under Section 4 or on prorate value of Section 4A.Analysis:The judgment by the Appellate Tribunal CESTAT AHMEDABAD involved the issue of valuation of Physician Samples of medicament manufactured on a job work basis for the principal and cleared to the principal. The question at hand was whether these samples should be valued under Section 4 or based on the prorate value of Section 4A. The appellant, represented by Shri. Anand Nainawati, argued that this issue had been previously settled in various judgments, citing cases such as Ujagar Prints v UOI 1989 (39) ELT 493 (SC) and others. It was contended that the valuation should be done as per the principle laid down by the Hon’ble Supreme Court in the Ujagar Prints case.The Ld. Advocate emphasized that the Physician Samples manufactured on a job work basis should be valued based on the cost of raw material plus job charges, as established by the Supreme Court in the Ujagar Prints case. On the other hand, Sh. T.K. Sikdar, representing the Revenue, reiterated the findings of the impugned order during the proceedings.After considering the submissions, the Tribunal noted that the issue had been consistently addressed by both the Tribunal and higher courts, with a clear precedent established that in the case of Physician Samples manufactured on a job work basis, the valuation should be based on the cost of raw material plus job charges, in line with the Supreme Court judgment in Ujagar Prints. The Tribunal found that the judgments cited by the Ld. Counsel were all based on the same issue, leading to the conclusion that the Revenue's proposal for valuation based on the pro rata value of Section 4A was incorrect and legally unsound. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, following the established legal precedent on the valuation of Physician Samples in such scenarios.This detailed analysis of the judgment showcases the legal intricacies involved in determining the valuation of Physician Samples manufactured on a job work basis for the principal, highlighting the reliance on past judgments and legal principles to arrive at a just decision.