BIOCHEM RESEARCH LABORATORIES Vs. CCE AND C

JUDGEMENT

(1.) ALL these appeals, which have a common, issue but different facts are taken up for disposal together 'Physician Samples' are distributed free by pharma companies/firm to medical practitioners. Since they are not sold their value has to be determined in accordance with the Central Excise Valuation Rule 1975 or 2000 depending on the period involved. Most Pharma Companies/firm Preferred 'Cost Construction' method envisaged under Rule 6b(ii) of Central Excise Valuation Rule 1975. In the beginning the disputes pertained to issues like whether or not all the elements of cost have been included or whether element of profit has been added to the cost of the product etc. But alter the Department questioned the applicability's of Rule 6b(ii) itself in a situation where the value of comparable goods to physician samples is available. The Department's contention is that where the value of comparable goods is available it should be adopted for the purpose of arriving at the value of physicians samples after allowing proper adjustments. The department has also been of the view and correctly so, that Rule 6b(ii) come into picture only when value cannot be determined under Rule 6b(i) of Customs Valuation Rules 1975. After the introduction of new Central Excise Valuation Rules 2000 the position underwent a change. The CBEC in its Circular No. 643/34/2002 -CX dt. 1.7.2002 clarified that the value physicians' sample be determined under Rule 11 read with Rule 8 whereby the Value of physicians' samples would be 115% of the cost of production of such samples.

(2.) ALL the appeals pertained to valuation of Physician Samples. The periods involved are different though. With this preface we proceed to deal with the appeals. We have heard both sides and considered the various submissions made. Appeal No. E/1820/99

(3.) THE appellants have been, during the period under dispute, filing price lists both for trade packs of medicines and physician samples. They have arrived at the value of the physician samples' adopting cost construction method. The department was aware of this situation. The appellants therefore claim, that there was no suppression of facts in so far as the value of the physician samples is concerned. The department therefore cannot invoke larger period of limitation while demanding duty. It is argued that the departments contention that the appellants should have adopted the value of comparable/similar goods cleared by them for the purpose of determining the value of physicians samples even I has merit, the demand is time barred.