TMI Blog1997 (3) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... ination of the assessable value of the free samples. Appellant filed price list declaring the value of physician s samples as the sum total of the cost of raw material, manufacturing cost and manufacturing profit. The price list having been approved provisionally, clearances were being made accordingly on payment of duty. For the periods from 25-7-1991 to 30-11-1991 and 1-12-1992 to 28-4-1993, notices were issued to the appellant stating that since Section 4(1) (a) of the Central Excises Act (for short, the Act) cannot be applied to the instant case in the absence of sale to physicians the provision of Section 4(1)(b) of the Act and Rule 6 of Central Excise (Valuation) Rules, 1975 (for short, the Rules) would be applicable and that being so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been taken into consideration by the lower authorities and they did not do so. 3. Each of the show cause notices contained Annexure 1 (a) which show the assessable value of the medicines being sold by appellant to the wholesale buyers. The charts furnish the strength of the sale pack, the assessable value and the strength of the sample pack. It is seen that in respect of 7 medicines, the contents of samples are much smaller than the contents of the sale pack. The contents respectively are 200 ml- l00 ml, l00ml-30ml, 60ml-30ml and l00 ml - 60 ml. In respect of three products, the contents of both packs are identical, namely, 5 gms. Even where the contents are identical, the assessable values sale packs and sample packs have wide varia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or consumed by him or on his behalf in the production or manufacture of other articles, but as we have already indicated above that the principles of Rule 6(b) may have to be followed while determining the value in this case under Rule 7 of the Rules and this was not disputed by either party. While following the above principles due regard must be paid to the broad scheme of the Rules. Sub-Rule (b) contains two clauses. Clause (i) applies where value of the comparable goods produced or manufactured by the assessee or by any other assessee is available. Clause (ii) applies only where value cannot be determined under Clause (i). According to the learned counsel for the appellant, the medicines sold in wholesale market and medicines sold to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied, namely, buyers or physicians, and the nature of the transactions, namely, sale or gift, do not appear to be relevant factor. Comparability must be of the goods and not of the buyer or the recipient of the goods. Comparability cannot also depend upon the consideration of the transaction. On the other hand, the third aspect referred to the appellant, namely, the difference in the quantity of contents of the two packages does seem relevant. As alread pointed out in respect of three medicines, quantities are same and in respect of other medicines quantities of physician sample are much smaller than the quantities of sale packages. Any element of doubt introduced by the disparity in the quantum of contents can certainly be neutralised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le is given to physician; but profit motive is present in the sense that the supply of free samples to the physician for use for promotion of medicines will in turn may improve sales. This of course was conceded by the learned counsel of appellant when he stated on behalf the samples are given for advertisement. We also fail to see how the absence of profit motive can have any relevance in the determination of the assessable value. The broad scheme of clause (i) and not of clause (ii) of the Rule 6(b) is applicable and going by such broad scheme the authority has to go by the assessable value of the comparable goods sold by the assessee or by any other manufacture subject to reasonable or rational adjustment, if any. 8. We, also hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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