Comparable goods valuation applies to physician free samples; quantity differences may be reasonably adjusted, not shifted to costing.

Physician's free samples of medicines were valued under the comparable goods method in the excise valuation rules, because wholesale market goods were treated as appropriate comparators even though the samples were supplied free and without profit motive. The difference in quantity could be neutralised by a reasonable adjustment, and that factor did not require a shift to the costing method. The costing basis under the relevant rule was therefore inapplicable, and valuation had to proceed on the basis of comparable goods with rational adjustment. The challenge to the valuation failed and the impugned valuation was sustained.

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Issues: Whether physician's free samples of medicines were to be valued on the basis of comparable goods under the excise valuation rules, with reasonable adjustments for quantity differences, or on a costing basis.

Analysis: The valuation of physician's samples was held to follow the broad scheme applicable to comparable goods. Goods sold in the wholesale market were treated as comparable to the free samples supplied to physicians, and the fact that the samples were not sold for a price or that there was no profit motive did not affect comparability. The difference in quantity could be neutralised by reasonable adjustment. The costing method under the relevant rule was held inapplicable, and valuation under the excise provision and valuation rules had to proceed on the basis of comparable goods subject to rational adjustment.

Conclusion: The physician's samples were not required to be valued on a costing basis and the comparable goods method with reasonable adjustment was applicable; the valuation adopted below was sustained.

Final Conclusion: The challenge to the valuation failed, and the impugned order was maintained.

Ratio Decidendi: For excise valuation, physician's free samples may be assessed on the basis of comparable goods, and disparity in quantity can be adjusted reasonably, but valuation is not to be shifted to a costing method merely because the goods are supplied free of charge.

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