Valuation of physician samples may be based on regular pack prices on a pro-rata basis when it reasonably reflects cost elements.

Physician samples used as advertising material may be valued on a pro-rata basis by reference to the price of regular packs where that method reasonably reflects the relevant cost elements. In the context of samples manufactured partly on job work and partly by the assessee, the department's attempt to adopt a higher assessable value based on special packing cost was not accepted, because the pro-rata method produced a valuation higher than one based only on material cost plus job charges for job-work samples. The assessee's valuation method was therefore accepted as proper.

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Issues: Whether physician samples manufactured partly on job work basis and partly by the assessee could be valued on a pro-rata basis with reference to the price of regular packs, instead of adopting a higher valuation based on the cost of special packing or material cost plus job charges.

Analysis: The valuation of physician samples was examined in the context of their use as advertising material and the appellants' method of taking the price of regular packs as the basis for a pro-rata determination. The special packing cost suggested by the department was not accepted as warranting a higher assessable value. For samples manufactured on job work, the pro-rata value was found to be higher than a valuation based only on material cost and job charges, supporting the assessee's method.

Conclusion: Pro-rata valuation of physician samples based on the price of regular packs was held to be proper, and the assessee's valuation method was accepted.

Ratio Decidendi: Where physician samples are valued on a pro-rata basis with reference to regular pack prices, and that method reasonably captures the relevant cost elements, it is an acceptable basis of valuation.

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