CADILA PHARMACEUTICALS LTD. Vs. C.C.E

JUDGEMENT

(1.) The issue which stands referred to the Larger Bench is in respect of valuation of physician's sample of medicines, which are supplied free of cost and are not being sold by the manufacturer. It was noticed by the referral Bench that the dispute stands decided by the Larger Bench of the Tribunal in the case of Blue Cross Laboratories v. C.C.E., Mumbai, 2006 (202) ELT 182 (Tri -LB), laying down that assessment of free supplied physician's samples is required to be done on the basis of pro rata value of the regular sale pack of the medicines, in terms of the provisions of Rule 6(b)(i) of the erstwhile Central Excise Valuation Rules, 1975. However, a doubt was expressed as to whether the said decision would be applicable in the context of the new Valuation Rules and especially for the period post January, 2005, when the normal assessable value of the regular sale packs, in terms of Section 4 of the Central Excise Act was not available, such medicines having been specified with effect from the said date under the provisions of Section 4A and attracting duty on the basis of the maximum retail sale price.

(2.) We have heard Shri V. Sridharan, learned Advocate appearing for the appellants and Shri Sameer Chitkara, learned SDR appearing for the Revenue.

(3.) The dispute in the present case is as to which Rule is appropriate Rule to be invoked for arriving at the assessable value of the physician's samples supplied free of cost. No Rule of Valuation Rules, 2000 admittedly covers such situation i.e. where the goods are supplied free of cost by the manufacturers. As such, resort has to be made to the residuary Rule 11, which provides for determination of the value of excisable goods using reasonable means consistent with principles and general provisions of these Rules and Sub -section (1) of Section 4. It is a common case from both sides that while applying Rule 11, support can be drawn from precedent Rules. It is again a common case of both sides that Rules 5, 6, 7, 9 and 10 are not to be applied, inasmuch as the same provides for the method of valuation, in terms of the goods sold and delivered at a place other than the place of removal or where the price is not the sole consideration for sale and where the excisable goods are same and after their clearance from the place of removal or where the goods are sold through the appellant's related person or sold the same through interconnected person. By excluding the said Rules from our consideration we are left with TWO contending Rules - Rule 4 and Rule 8 for our consideration so as to arrive at the correct value in terms of Rule 11.