Comparable goods valuation governs physician's samples of medicines, with pro rata adjustment from commercial pack prices.

Physician's samples of patent and proprietary medicines cleared free of charge were treated as comparable to the larger commercial packs of the same medicines sold in the market. Valuation was to be made under Rule 7 of the Central Excise (Valuation) Rules by applying the price of comparable goods under Rule 6(b)(i), with a pro rata adjustment from the commercial pack price. The cost-based method under Rule 6(b)(ii) was held irrelevant for this purpose. The demand of duty raised without notice was not sustainable, while the valuation adopted by the lower authorities was otherwise substantially upheld.

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Issues: Determination of the assessable value of physician's samples of patent and proprietary medicines cleared free of charge.

Analysis: The physician's samples were held to be comparable to the larger commercial packs of the same medicines sold in the market. Following the earlier Tribunal view, valuation was to be made under Rule 7 of the Central Excise (Valuation) Rules by applying the principles in Rule 6(b)(i), namely the price of comparable goods, with a pro rata adjustment from the commercial pack price. The costing method under Rule 6(b)(ii) was held to be irrelevant for this purpose.

Conclusion: The assessable value of the physician's samples is to be determined on the basis of comparable commercial packs with pro rata adjustment, and the demand of duty for the amount raised without notice was not sustainable.

Final Conclusion: The valuation adopted by the lower authorities was substantially upheld, but limited relief was granted in respect of the amount confirmed without prior notice.

Ratio Decidendi: Where physician's samples are comparable to commercial packs of the same goods, their assessable value is to be determined on the price of comparable goods with appropriate pro rata adjustment, rather than on a cost-based method.

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