Physician sample valuation under excise law turns on the assessee's transaction value at removal, not later free distribution.

Physician samples of P and P medicaments were examined for excise valuation under Section 4A or Section 4 of the Central Excise Act, 1944. The Tribunal applied the principle that valuation depends on the transaction between the assessee and the buyer at the time of removal, and that subsequent free distribution by distributors to physicians does not change the assessee's valuation basis. On that reasoning, the Department's case based on ultimate non-sale to physicians failed, the demand was not sustainable, and the orders confirming duty, interest, and penalty were set aside.

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Issues: Whether physician samples of P and P medicaments were assessable under Section 4A of the Central Excise Act, 1944 or under Section 4 of the Central Excise Act, 1944.

Analysis: The valuation dispute turned on whether the clearances as physician samples could be treated differently from regular clearances merely because the goods were not sold by physicians to end users. The governing principle applied was that valuation depends on the transaction between the assessee and the buyer at the time of removal. Where price is charged on that transaction, the subsequent free distribution by distributors to physicians does not alter the applicable valuation method. The Tribunal followed the settled position that the Department's objection, founded on the ultimate non-sale to physicians, could not displace the actual transaction value basis applicable to the assessee's clearances.

Conclusion: Physician samples were not liable to be assessed under Section 4A on the Department's theory, and the demand could not be sustained. The orders confirming the demand, interest, and penalty were set aside and the appeals were allowed.

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