TaxTMI 
TaxTMI 
2006 (8) TMI 6
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....hat there was a short payment of Rs. 5,66,046/- as worked out in Annexure 'A' thereto, in respect of the removals effected between August 1998 and January 1999. 2.1 The adjudicating authority on the basis of the material on record, found that there was no major difference between the physician's samples and the regular goods of the same quality because it was noticed that most of the medicaments, both in retail strips as well as physician's samples, were put in similar laminated foils. The packing for retail sales was in foils of 10 tablets each packed in cardboard boxes whereas, the physician's samples were cleared in an outer casing of laminated paper and inner packing of aluminium foil. It was, therefore, held that there was no justification in claiming different price for physician's samples from the medicaments sold in retail under MRP. Against the order confirming the demand, the Appellate Commissioner while dismissing the appeal held that the normal price in respect of the subject medicines for which the samples were supplied was available under section 4(1)(a) and that there was no justification for not applying the said value. It was however, observed that, even otherwise....
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....f Chapter 30 (Pharmaceutical Products) defined manufacturing in the context of such products and, therefore, until labeling or re-labeling or repacking into retail packs was done, the final product of such medicaments will not come in to existence. Therefore, the labeling and packing done for the purpose of free physician's samples would bring about a final product different from the commercial packings of identical medicine. It was contended that the proper method to be adopted for working out the value of such free samples was that of costing, and the assessable value of such samples cannot be determined with reference to the price of the commercial packs which differed in the quantity of such medicines. It was submitted that the final product as packed in the free samples was different from the identical product which was not so packed. It was argued that the free samples which were of four tablets were contained in a packing of smaller size than the size of the commercial packs containing ten tablets. Furthermore, even the labels were different since on the physician's samples it was printed that they were not for sale and were free physician's samples. It was also submitted th....
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....T 844 (MP) which upheld the validity of Rule 6 (b) (i), was cited to point out that it was held in the context of the said rule that the expression "comparable goods" in the rule indicated that the goods taken into account for determining the assessable value should be comparable with the excisable goods and if there is any difference in the material characteristics of the excisable goods and the comparable goods, it has to be obliterated, by taking into account all the relevant factors and making such adjustment as may be reasonable for that purpose in order to find out the "nearest ascertainable equivalent". It was held in para 21 of the judgment that sub-clause (ii) provides that if the value cannot be reasonable determined under sub-clause (i) of rule 6 (b) then the cost of production or manufacture including the profits, if any, which the assesses would have normally earned on the sale of such goods, is to be treated as the value of the excisable goods. (e) The decision of the Supreme Court in Ujagar Prints Vs. Union of India reported in 1988 (38) ELT 535 (SC) and 1989 (39) ELT 493 (SC) were relied upon to point out that the method of determination of the assessable value was....
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....cine "MEFTAL" which were to be supplied free to doctors. From the record it appears that even the adjudicating authority had a look at these packs. We noticed that the tablets are put in similar aluminium foils both in regular packs as well as the physician's samples, and both the packs contained they contained the requisite writings about the composition etc. of the medicines. The only difference in the packs was in their size because there are placed ten tablets in a regular retail pack while four in the physician's sample. The colour scheme is also different. The physician's sample is placed in a catch cover on which also there is an endorsement that it was physician's sample not to be sold besides the other required data which was required to be printed in accordance with law for indicating the composition of the medicine etc. 8. The starting point for the discussion, therefore, is that both the packs contained identical medicine but the physician's sample was smaller since four tablets were put in it while the larger regular commercial pack had ten. On the basis of this difference, it has been stoutly argued that these are to tally distinct products and there cannot be a comp....
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....this sub-clause the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors and, in particular, the difference, if any, in the material characteristics of the goods to be assessed of the comparable goods; (ii) if the value cannot be determined sub-clause (i), on the cost of production or the manufacture including profits, if any, which the assessee would have normally earned on the sale of such goods." 9.1 It will be noticed from rule 6(b)(i) that it refers to the value of comparable goods produced or manufactured by the assessee or by any other assessee. By itself, rule 6(b) would apply only where the goods are not sold by the assessee, but are used or consumed by him or on his behalf in the production and manufacture of other article. However, the method adopted under this rule becomes relevant in cases where the value of excisable goods cannot be determined under the rules (even where there is no captive consumption), by virtue of rule 7, which lays down that if the value of the excisable goods cannot be determined under any of the rules 4 to 6, the proper officer shall determine the same according to best of his j....
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....an's samples are identical in the material characteristics as well in quantity, then there would be no scope for any doubt in working out the value of the excisable goods not sold, namely, free physician's samples on the basis of value of such medicines which are sold by the assessee, as provided by rule 4. The only adjustment contemplated in that rule would be on account of the difference in the dates of delivery which can be made in cases where there is such difference in the delivery dates. However, when the physician's sample differs in quantity though identical in essential characteristics of the medicine, keeping in view Chapter Note 5 of Chapter 30, which includes labeling, repacking etc. in the manufacturing process, these nonetheless would be "comparable goods" within the meaning of rule 6(b)(i) of the said rules and there would be no scope for adopting the costing method contemplated by sub-clause (ii) of sub-clause (b) of rule 6 in respect of such physician's samples. The material characteristics of the goods are virtually identical because the identical medicine which is packed in the retail packs is packed in the physician's sample. Though manufacturing process gets an....