TMI Blog2004 (12) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise Act and that of the physicians samples under the Valuation Rules as the latter are supplied free. During the said period the appellants filed price declaration with the department in respect of physician samples giving the following particulars: description, tariff classification, cost of production, profit that could have been normally earned by assessee on sale of such goods and value declared under Section 4. The department did not question the basis on which the value was arrived. 2. On 20th July 2000, however, a show cause notice was issued asking the appellants to show cause why the value of physician samples cleared during August 1995 to May 2000 should not be redetermined under Rule 4 of the Central Excise (Valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 11AB etc. Hence these appeals. 5. Heard both sides. 6. The learned Advocate Shri Manoj Sanklecha took us through the Valuation Rules. 1975 and argued how Rule 4 is inapplicable. The Rule itself during the relevant period read thus: "The value of any excisable goods shall be based on the value of such goods is sold by the assessee for delivery at any other time nearest to the time of removal of goods under assessment, subject, if necessary, to such adjustment on account of the difference in the dates of delivery of such goods and of the excisable goods under assessment as may appear reasonable to the proper office." It is argued that the Rule applies to a situation where the value cannot be determined because of the difference in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect. 7. On the limitation aspect, he argued that the department was aware of the method adopted by the appellants in arriving at the value as the appellants have been filing declaration under Rule 173C of the Central Excise Rules during the relevant period. If such a declaration is found wanting in detail, the department could have asked the appellants to furnish further information. The department cannot contend that the declaration lacked information necessary to determine the value and therefore there was suppression. Section 11AC is not applicable to the clearances made prior to September 1996. No penalty can be imposed on the company and its employees. 8. The learned DR Shri S.V. Parelkar submitted that the value has to be arrived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the value of physician samples. We, therefore, following the ratio of this decision, agree with the appellants that value cannot be determined under Rule 4. 10. Having said so, we have to examine the method adopted by the Commissioner in the impugned order. Even though he cited Rule 4 as the correct rule, he determined the value as per Rule 6(b)(i) only. He gave suitable adjustments for the quantity and arrived at the value. The Rule may be wrong but the method adopted by the Commissioner cannot be faulted. For a moment if we substitute Rule 4 in the impugned order with Rule 6(b)(i), the result would be the same. We have already observed that the Tribunal in Cheryl Laboratories case held that physician samples are comparable with tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normal period of limitation. Consequently, penalty under Section 11AC is not imposable. So is the case in respect of interest under Section 11AB. We do not subscribe to the theory that penalty under Rule 173Q read with. Section 11 AC can be imposed in these circumstances. The issue pertains to valuation and not clandestine removal. The assessee may have entertained a genuine belief that the goods are assessable to duty after determining the value under Rule 6(b)(ii). 12. Penalties on the director and administrative manager are set aside allowing their appeals. 13. The appeals are allowed in the following terms :- (a) The appellant-company's appeal is partly allowed upholding the demand during the normal period of limitation. Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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