2024 (11) TMI 1124

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....engaged in the manufacture of Tungsten Carbide Tools, Tips and Inserts, Machine Tools accessories and Special Purpose Machines falling under Chapter 82 of Central Excise Tariff Act, 1985. On audit of their records by the Department, it was noticed that the appellant had cleared excisable goods to their sales engineers for trial and demonstration purpose at the location of their customers on payment of duty on the value being 110% of cost of production determined as per Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Since the appropriate Rule for determination of value in such circumstances is Rule 4 and not Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, ....

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....5% profit. Consequently, they were permitted by the department to adopt the said procedure and follow Para 3.1 of Chapter 11 of Central Excise Manual. He submits that there has been lot of confusion about the adoption of the appropriate valuation principle in determining the clearance of free samples outside the factory for demonstration or exhibition purpose. The principle of law has been laid down by the Hon'ble Bombay High Court in the case of Indian Drug Manufacturers Association vs. Union of India: 2008 (22) ELT 22 (Bom.) and Hon'ble Supreme Court in the case of Biochem Pharmaceuticals Industries Ltd. vs. CCE, Vapi: 2015 (322) ELT 808 (SC) after lot of judgments in favour of the assessee and against the assessee being passed during the....

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....e of Excisable Goods) Rules, 2000. The appellant, in the present appeal, is not contesting the issue on merit, however, the learned advocate appearing for the appellant vehemently argued that invoking extended period in the present case is uncalled for as there is no misdeclaration or suppression of facts on the part of the appellant. 7. We find that initially the view of the department was that the clearance of samples free from the factory leviable to duty and the value should be determined adopting Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Later, the same was reconsidered and it was clarified that the proper rule for determination of value of free samples cleared from the factory would b....