TMI Blog2009 (2) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant cleared P.S. packs first to his Central Warehouse at Bhiwandi and from there despatched to M/s. Aditya Medisales Ltd., Bhiwandi under general invoices for subsequent free distribution to different physicians/concerned persons through medical representatives, by discharging duty on a lower assessable value than the pro rata sale pack value and thereby evaded payment of Central Excise duty as worked out in the relevant notice. Commissioner (Appeals) has held that transaction value has to be accepted and has observed as under : In the present case, the appellant has sold P.S. Packs to M/s. Aditya Medisales Ltd. under proper Central Excise invoices. The consignee is not a related person and the transaction was on Principal to Principal basis. There is no financial flow hack to the appellant and no additional consideration. Even it has not so been alleged in the impugned notice. No evidence has also been brought on record to indicate that the transaction value of goods is different than the actual price charged by the appellant from M/s. Aditya Medisales Ltd. Therefore, all the ingredients of Section 4(1)(a) of Central Excise Act, viz., goods in question sold from the factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 4(1)(a) will not apply and in this case, the goods have been sold and therefore, the order of Commissioner (Appeals) is correct. 3. We have considered rival submissions. Admittedly, after the physician s samples were sold to M/s. Aditya Medisales Ltd., Bhiwandi, the same were distributed free of cost to physicians by the employees of M/s. SPIL. This would mean that M/s. Aditya Medisales Ltd., Bhiwandi did not sell physician s samples received by them in the market nor they used for captive consumption. The question arises is that as to how a trading firm can return the goods purchased by them to the manufacturer for free distribution. Unfortunately, no answer is forthcoming from the records nor there are rival submissions to this important question. No commercial concern will be able to distribute goods purchased free of cost and it is not the case of the respondent that M/s. Aditya Medisales Ltd., Bhiwandi is a charitable trust and doing charity and they have other sources of income to compensate the loss suffered by free distribution of free samples. The main ground taken by the respondent and upheld by Commissioner (Appeals) is that M/s. Aditya Medisales Ltd., Bhiwandi is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of respondents. Therefore, the Commissioner (Appeals) has erred in holding that the transaction value has to be accepted in this case. Accordingly, the appeal filed by the Revenue is allowed. (Pronounced in Court on______________) Sd/- (B.S.V. Murthy) Member (Technical) 4. [Order per : Archana Wadhwa, Member (J)]. - With respect to my learned brother Shri Murthy, Member (Technical), I do not agree with the conclusion arrived at by him and as such, record a separate order. 5. Only short issue required to be decided in the present case is as to whether the transaction value at which the physician s samples have been sold by the appellant to M/s. Aditya Medisales Ltd. is required to be adopted for the purposes of duty, in terms of provisions of Section 4(1)(a) of the Central Excise Act or resort is required to be made to Section 4(1)(b) read with the Central Excise Valuation Rules. 6. It is seen that during the course of investigation, statement of Shri J.K. Vasavada, Manager (Production) of M/s. Sun Pharmaceuticals Industries Ltd., of Shri N.K. Gopinathan, Manager (Distribution) of M/s. Sun Pharmaceuticals Industries Ltd., statement of Shri Sanjay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rother Member (Technical) has concluded that price is not the sole consideration, even though, the buyer and seller are not related and transaction is on principal to principal basis, on the ground that it is not shown as to how M/s. Aditya Medisales is able to give it back to M/s. SPIL, who distribute samples free when they have purchased the same and as such, the conditions of Section 4(1)(a) do not stand fulfilled. With respect to learned brother Member (Technical), I find that the observations that the sold goods are given back by M/s. Aditya Medisales to the appellant herein for free distribution are not coming from the records of the case. All the deponents in their statements, have deposed that free distribution of physician s sample was being done with the liaison with marketing peoples of M/s. SPIL. Admittedly, when M/s. Aditya Medisales is the wholesale distributor of the appellant s product and his sale of such products is dependent upon and requires free distribution of samples. It is in his business interest also to distribute such samples free of cost. Taking help of M/s. SPIL for planning out such despatch and distribution of samples and supervision of the same by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the order of the Assistant Commissioner that he has resorted to the provisions of 4(1)(b) read with valuation rules, on the findings that the goods were not sold by the assessee, but freely distributed by them. As already observed, the physician s samples were admittedly sold by the appellant to M/s. Aditya Medisales, who had further distributed the same free of cost. Distribution of physician s samples free of cost by M/s. Aditya Medisales is of no consequence in as much as the goods are not liable to any excise duty in his hand. The duty assessment is to be done at the appellant s end where they have admittedly sold the goods and have not distributed the same free of cost. As such, the entire basis for the order of the original adjudicating authority, is not correct. 11. In view of the above, I find no reason to take a different view than the view expressed by the Commissioner (Appeals) in his impugned order or from the earlier orders of the Tribunal in the respondent s own case as mentioned in the order proposed by my learned brother Member (Technical). 12. I also note from the proposed order of my learned brother Member (Technical) that the appeal filed by Revenue is allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation of distributing the same by the appellants medical representatives without a written agreement and without a binding condition that the samples are to be distributed to the medical representatives appointed by the appellants. In the absence of written agreement I am inclined to take a view that the whole arrangement is on paper only with a view to avoid duty and in fact there is no sale. I am not in agreement with the view expressed by Member (Judicial) that the price at which the samples are sold to M/s. Aditya Medisales Ltd. is a genuine price on the stated grounds, that the two are not related and there is no flow back from M/s. Aditya Medisales Ltd. to the appellants and further there is no loss to M/s. Aditya Medisales Ltd. in free distribution of samples as the loss is compensated by profit in the marketing and distribution of the trade packs. On the contrary these very facts establish that agreed price is not the sole consideration and is influenced by the factor that free distribution is to be done by the appellants themselves through its medical representatives and whole planning thereof is to be done by the appellants. Thus, M/s. Aditya Medisales Ltd. had been abso ..... 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