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TMI Blog2009 (2) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 gate, price is the sole consideration and the buyer and seller are not related persons, are fulfilled in respect of P.S. Packs in question. Hence, the value declared in respective invoices for such clearances has to be accepted as 'transaction value' under Section 4(1)(a) of CEA, 1944. Subsequent, free distribution of P.S. Packs' by the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yees 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 not a related person and transactions are on Principal to Principal basis. No doubt, no evidence has been put forth by Revenue to show that M/s. Aditya Medisales Ltd., Bhiwandi is a related person or there is a flow back either way. The important question that arises is that whether just because evidence is not forthcoming to show t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (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 K. Sharma, Sr. Executive (Distribution) of M/s. Sun Pharmaceuticals Industries Ltd., were recorded. All the three deponents have deposed in clear and categorical term that as a general practice of their company, the entire stock of sample packs are sent to their Central Warehouse at Bhiwandi and sold to M/s. Aditya Medisales Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave 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 the appellant's employee, for furtherance of the sale, which is in interest of manufacturer as also of the wholesale distributor, would not be sufficient to discard normal transaction value under Section 4(1)(a). It stand agreed by both the parties as also by Revenue in their memo of appeal that the sale value was only considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales, 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 allowed without adverting to the issue of penalty imposed upon the respondent by adjudicating authority. It is seen that even if the value adopted by the manufacturing unit is required to be rejected, there is no justification or warrant for imposing penalty upon them inasmuch as the entire dispute is a bona fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 absolved of all the expenses incurred on the marketing and distribution of physician samples and the expenses to this effect have been incurred by the appellants themselves and therefore the agreed price is influenced by the factor that the distribution expenses have been taken over by the appellants themselves. Therefore even if there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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