Transaction value applies to physician samples sold on principal-to-principal terms; pro rata MRP valuation is inapplicable.

Physician samples of medicaments sold to the brand owner on a principal-to-principal basis are to be valued under Section 4(1)(a) of the Central Excise Act, 1944, because the transaction value governs where sale is undisputed. The pro rata MRP method under Section 4A does not apply to such sales, as it is confined to a different factual setting involving job-work removal where sale is absent. Relying on earlier binding and coordinate decisions, the Tribunal held that valuation under Section 4(1)(a) was correct and the departmental demand based on pro rata MRP valuation was unsustainable.

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Issues: Whether physician samples of medicaments sold on a principal-to-principal basis to the brand owner were liable to valuation under Section 4(1)(a) of the Central Excise Act, 1944, or on a pro rata MRP basis under Section 4A.

Analysis: The transaction of sale to the brand owner was not in dispute and was on principal-to-principal terms. In such a case, the applicable basis of valuation is transaction value under Section 4(1)(a) of the Central Excise Act, 1944. The pro rata MRP method was found inapplicable because that approach was relevant to a different factual situation involving removal on job work basis, where sale was not involved. The issue was treated as settled by the earlier binding and coordinate decisions relied upon.

Conclusion: Valuation was correctly made under Section 4(1)(a), and the department's demand based on pro rata MRP valuation was unsustainable.

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