Transaction value for physician samples sold to distributors governs excise valuation; later free distribution does not change the assessment.

Physician samples of P or P medicaments sold by the assessee to distributors were assessable on transaction value under section 4(1)(a) of the Central Excise Act, 1944 because the sale price at that stage was undisputed and the goods were sold for consideration. The distributors' later free distribution of samples to physicians did not alter the valuation, since section 4(1)(b) applies only where goods are not sold or where transaction value is otherwise inapplicable. The earlier decision in the assessee's own case was followed, so valuation under section 4A or any different method was rejected.

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Issues: Whether physician samples of P or P medicaments cleared to distributors were assessable under section 4(1)(a) of the Central Excise Act, 1944 or under section 4(1)(b) thereof, instead of being valued under section 4A.

Analysis: The dispute turned on the nature of the transaction between the assessee and its distributors. The price charged at that stage was not disputed, and the subsequent free distribution of samples by distributors to physicians was treated as irrelevant for valuation. Section 4 provides that where goods are sold and the price is the sole consideration, the transaction value applies, while clause (b) operates only in other cases, including where goods are not sold. On the facts accepted in the record, the goods were sold by the assessee to distributors for consideration, so the valuation could not be displaced merely because the distributors later supplied the goods free of cost. The earlier decision in the assessee's own case was followed.

Conclusion: The physician samples were correctly assessable on transaction value under section 4(1)(a) of the Central Excise Act, 1944, and the demand based on a different valuation method could not survive.

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