Indian Kanoon - Search engine for Indian Law

2. For the second category of goods, the Commissioner (Appeals) relied on the order of Bombay High Court in Writ Petition No.246/06, she particularly relied on the following observations of the Honble High Court of Bombay:

Assuming that the petitioner are right in contending that the valuation of the physicians samples cannot be determined under any of the specific rules, even then, as per Rule 11 the value of physician samples has to be determined by using reasonable means consistent with the principles and the general provisions of 2000 Rules and Section 4 (1) of the Act. As stated earlier, Rule 4 is the only general rule and therefore, it is just and proper to hold that the valuation of physician samples be determined under Rule 11 read with Rule 4 and such a valuation would be reasonable and consistent with the principles and the general provisions of the Rules and the Act. The contention that the physician samples must be valued under Rule 11 read with Rule 8 cannot be accepted because Rule 8 applies to cases where the goods are not sold but are captively consumed whereas, goods similar to physician samples are in fact sold in the open market and in fact physicians samples are not cleared for captive consumption. Hence, the valuation of physician samples cannot be determined under Rule 11 with Rule 8 of the 2000 Rules.

5. We have considered the rival submissions.

6. We find that there are various situations which arises while manufacturing physician samples. The manufacturer may be a manufacturing

i) on job work basis for some principal manufacturer, both the trade packs and physician samples, and supplying both to the principal manufacturer, who in turn distributes physician samples free of cost, or sells to distributers for distribution free of cost.

ii) on his own behalf, both the trade packs as well as the physician samples and

a) distributing physician samples to distributors free of cost or

b) selling physician samples to distributors for further distribution free of cost.

6.1 It is seen that the various cases cited by rival counsels fall in these different categories. In the instant case there are two situations

a) CRL manufacturing the physician samples on job work basis for Cosmae Pharma Lts and Cosmae Farma Laboratories, who in turn distribute the physician samples or sells for distribution free of cost.

b) CRL manufacturing for itself and selling the same to Cosmae Farma Laboratories.

6.?The issue in this matter before us is that whether the physician samples cleared by the appellants to the brand owner on payment of duty on the transaction value arrived at as per the formula laid down by the Honble Apex Court in the case of Ujagar Prints (supra) i.e. cost of raw materials + conversion charges or the physician samples manufactured on job work basis are to be cleared as per Section 4A of the Act i.e. less abatement on pro rata basis. The case law cited by the learned SDR are not relevant to the facts of the case as in those cases the manufacturers themselves manufacturing the physician samples and distributing the same to Physicians/Doctors free of cost, therefore no transaction value was available. It is an admitted fact that P&P medicaments are to be cleared on MRP basis value therefore on those cases it was held as valuation of physician samples is to be on the basis of MRP basis under Section 4A of Act.