TMI Blog2023 (7) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... (1)(a) of the Act, by reason of the goods being specified under Section 4A(1) making the retail sale price i.e. MRP as its deemed value, the appropriate rule governing the valuation of physician s samples would continue to be Rule 4. Thus, the contention of the appellant before the Supreme Court in Medley Pharmaceuticals [ 2011 (1) TMI 13 - SUPREME COURT] that the free physician samples have to be assessed on the cost of manufacture plus 15% profit as contemplated under rule 8 of the 2000 Rules was not accepted by the Supreme Court - In the present appeal, the appellant has also determined the valuation under rule 8 of the 2000 Rules by adding 15% profit to the cost of manufacture. Such a determination of the assessable value has not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the free samples has to be at par with the value of the goods under section 4A of the Excise Act. The following chart shows the differential duty that the appellant would have to pay: Period Assessable value on which physicians samples actually cleared Assessable value under section 4A Differential value Differential Duty 25.04.2005 to 31.03.2007 1,88,115/- 4,25,386/- 2,37,271/- 38,723/- 01.04.2006 to 31.03.2007 1,95,028/- 4,56,991/- 2,61,963/- 42,800/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e board bearing No. 813/10/2005 CX dt. 25.4.2005 also recognises that such samples are required to be value in terms of the valuation of physician samples should be determined in terms of rule 4 of the said rules. (emphasis supplied) 6. The Assistant Commissioner did not accept the contentions raised by the appellant and confirmed the demand of duty with interest and penalty. The relevant portion of the order is reproduced below: 4. In view of the above discussion it is my candid opinion that notwithstanding the non-availability of the normal sale price under Section 4(1)(a) of the Central Excise Act 1944, by the virtue of goods being specified under Section 4A(1) making the retail price i.e. MPR as its deemed value, the appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise Act, 1944. They further contend that under the Weights and Measures Act, 1976, they are not required to mention the MRP. Even though it is mentioned, various clarifications made through different circulars and 37 B orders make it clear that these goods not being used for captive consumption are not to be assessed under Rule 11 read with Rule 8 of Valuation Rules nor the transaction value under Section 4 is to be applied. The original adjudicating authority has given clear finding as to valuation and suppression of facts with an intention to evade duty and hence he has imposed mandatory penalty under Section 11AC and demanded interest under Section 11AB. The appellants' further contention is that since the valuation rules an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity is as follows: 31. In view of the above discussions, I am of the opinion that notwithstanding the non-availability of the normal sale price under Section 4(1)(a) of the Act, by reason of the goods being specified under Section 4A(1) making the retail sale price i.e. MRP as its deemed value, the appropriate rule governing the valuation of physician s samples would continue to be Rule 4 and the decision of the Larger Bench in Blue Cross Laboratories Ltd. s case (supra) mutatis mutandis continues to be good law. The reference is accordingly answered in the affirmative in favour of the Revenue and against the appellant/assessee. 11. The Supreme Court framed the question of law in one of the two Civil Appeals in Medley Pharmaceutical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty under the Act. 27. Even assuming that Shri. Ganesh is correct, when he contends that physician samples are not allowed to be sold in the open market in view of the statutory prohibition on their sale, and hence are not marketable; the Revenue is only concerned with the manufacture of the goods and the possibility of marketability of the goods. When the product is manufactured by a Pharmaceutical Company, it is for the purpose of sale i.e., every such product including Physician Sample is capable of being sold in the open market, but the pharmaceutical company makes the choice to distribute the same as a free sample. In other words, it is not mandatory for the pharmaceutical company to distribute free physician samples of every drug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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