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2. The brief facts of the case are that the appellant  assessee are engaged in the manufacture of pharmaceutical products in their own account as well as on loan licence basis. The dispute in the present case relates to determination of value of physician samples. There are two types of transactions involved in the clearance of such samples. In case the samples of pharmaceutical products are manufactured using own raw material and packing materials, the subject goods are sold to the contractered customers who in turn distributed the samples to the physicians free of cost. In such transaction the appellant discharged duty on such physician samples based on the transaction value indicated in the invoice. The Revenue entertained a view that when similar goods were sold in trade pack covered by MRP based valuation, the same system of MRP based valuation should be followed for such physician samples also.

7. We have heard both the sides and perused the appeal records including written submissions and various decisions relied upon by both the sides. The main point of contest is applicability of Rule 4 of Valuation Rules, 2000 to determine the value of physician samples cleared by the appellant  assessee. As already noted in one set of transactions such physician samples were sold to the contracting customers and the appellant assessee adopted the transaction value for purpose of discharging Central Excise duty. In another set of transaction where such physician samples alongwith trade pack were manufactured by the appellant  assessee based on raw material, packing material supplied by the licence holder and the manufacture is on loan licence basis. The value of physician samples were arrived at by the appellant  assessee on cost construction basis and following the principles of Rule 8 for discharging duty on 110% of cost of production. In both these situations the Revenue contended that the valuation of physician samples should be in terms of Rule 4 which talks about valuation based on comparable goods. Reliance was also placed on the revised Board Circular dated 25.04.2005 wherein it was clarified that in case of free samples the value should be determined under Rule 4.

9. The Tribunal decision in the case of Sun Pharmaceuticals Industries vs. CCE, Surat-II  2005 (183) ELT 42 (Tri. Mumbai) is relevant. When the physician samples were sold and the transaction value is not questioned for any reason, the same has to be accepted for payment of Central Excise duty. Further, we find the Board Circular dated 25.04.2005 will apply to cases where when the samples were distributed free by the manufacturer. In the present case, there is a sale transaction and the manufacturer is selling the physician samples to the principal customer who may later distribute it free to the physician. In such circumstances, we find the reliance placed on the Larger Bench decision of the Tribunal is not appropriate.

10. The Tribunal in Gelnova Laboratories (supra) held that when the physician samples were manufactured on principal to principal basis the same are required to be assessed under Section 4(1)(a). The Tribunal examined the Larger Bench decision in Cadila Pharmaceuticals (supra). We find that the reliance placed by the Revenue on the decision of Honble High Court in Indian Drugs Manufacturers Association (supra) is also not appropriate. In the said case there was free supply of physician sample and the Court was not dealing with the issue of acceptance of transaction value under Section 4(1)(a). In the present case, as noted already there is, admittedly, a transaction value.