COMMISSIONER OF CUSTOMS Vs. HEWLETT PACKARD INDIA LTD.

JUDGEMENT

(1.) Heard Counsel for the parties. Rule. Rule made returnable forthwith. By consent of parties, the petition is taken up for final hearing.

(2.) This petition is filed to challenge the validity of circular No.813 dated 25/4/2005 issued by the Central Board of Excise and Customs, Government of India, New Delhi ( 'Board' for short). By the said circular the Board has clarified that the valuation of physicians free samples should be made under Rule 4 of the Central Excise Valuation (determination of price of excisable goods) Rules, 2000 ('2000 rules' for short) and not under Rule 11 read with Rule 8 of 2000 Rules as stated in its earlier circular No.643 dated 1/7/2000.

(3.) The main argument of the petitioners is that the physicians samples cleared from the factory are not sold but are supplied freely to the medical practitioners and, therefore, the valuation of physicians free samples have to be made by applying the method applicable to the goods which are not sold. It is contended that for more than three decades, the revenue has been valuing the physicians samples by applying the method applicable to goods which are used for captive consumption as per the judicial decisions rendered to that effect. Even after the 2000 Rules were framed, the Board had issued a circular No.643 dated 1/7/2002 directing that the valuation of physicians free samples should be made by applying the method applicable to the goods cleared for captive consumption. Therefore, the impugned circular No.813 dated 25/4/2005 which seeks to value the free samples by applying Rule 4 (applicable to goods that are sold) instead of Rule 8 (applicable to goods that are not sold) is contrary to the judicial decisions holding the field for more than three decades and, hence the said circular No.813 dated 25/4/2005 is liable to be struck down as illegal and contrary to law.