Excise valuation of physician's samples turns on comparability: material packaging differences justify cost construction instead of comparable goods method.

Physician's samples cleared free for distribution to doctors were not treated as comparable goods for excise valuation because they differed from wholesale market goods in packing, printing, labelling and the absence of a wholesale pack. The applicable principle was that goods valued as comparable under Rule 6(b)(i) should, as far as possible, be identical, and material differences must be recognised. On that basis, valuation under the cost construction method in Rule 6(b)(ii) was supported, while the comparable goods method was inapplicable.

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Issues: Whether physician's samples cleared free for distribution to doctors were to be valued under the comparable goods method in Rule 6(b)(i) of the Central Excise Valuation Rules, 1975, or under the cost construction method in Rule 6(b)(ii).

Analysis: The physician's samples and the wholesale market goods were found not to be truly comparable, having regard to differences in packing, printing, labelling and the absence of a wholesale pack in the case of free samples. The governing principle applied was that comparable goods under Rule 6(b) should, as far as possible, be identical goods, and relevant differences must be recognised. On that basis, the valuation adopted by the Commissioner (Appeals) under Rule 6(b)(ii) was supported.

Conclusion: The comparable goods method under Rule 6(b)(i) was held inapplicable, and the valuation under Rule 6(b)(ii) was upheld.

Final Conclusion: The impugned order was sustained and the Revenue's challenge failed.

Ratio Decidendi: Physician's samples cannot be valued as comparable goods unless they are, as far as possible, identical to the market goods; where they are not comparable, valuation by cost construction is justified.

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