Value of Free Samples should be Determined u/r of Central Excise Valuation Rules: CESTAT Dismisses Appeal of Amazon Drugs Pvt Ltd [Read Order]

The Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the value of free samples should be determined under rule 4 of the Central Excise Valuation Rules,2000. 

Amazon Drugs Pvt. Ltd, the appellant assessee was a manufacturer of P or P Medicines, and the valuation of the goods manufactured by the assessee was undertaken regarding the retail sale price under section 4A of the Central Excise Act, 1944. 

The assessee appealed against the order passed by the Commissioner (Appeals) for imposing the penalty section 11A(1) of the Excise Act on the ground of nonpayment of excise duty. 

During the hearing of this appeal, none appeared on behalf of the assessee and P. Saravana Perumal appeared for the revenue. 

The assessee filed a reply and stated that the circular dealt with the clearance of physician samples. Therefore, the issue of valuation of physician samples would have to be determined under section 4 of the Central Excise Valuation Rules. 

Further submitted that the physician samples cleared are not required to be affixed with Marginal Retail Price and are not meant for sale, thus the question of discharging duty does not arise. 

The counsel for the revenue contended that the valuation of free samples has to be evaluated as per the Central Excise Valuation Regulations Rules and the penalty along with interest imposed by the adjudicating authority for nonpayment of excise duty was valid and liable to be sustained. 

The bench observed that the free physician samples had to be assessed on the cost of manufacture plus 15% profit as contemplated under rule 8 of the Central Excise Valuation Regulations Rules was not accepted and the decision made by the Commissioner (Appeals) was valid and liable to be sustained. 

The two-member bench comprising Dilip Gupta (President) and R.Bagya Devi (Technical) upheld the decision of the imposition of penalty while dismissing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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