- (1.) The Appellant herein is a Pharmaceutical Company which manufactures various kinds of medicines. Apart from selling the medicines in the market, some medicines are distributed to the physicians as samples for which the Appellant is not charging any amount from those physicians. To put it otherwise, these are distributed free to the physicians. The question which has arisen in the present appeals is the valuation of these samples. We may mention at the outset that even when these samples are distributed free to the physicians, they are exigible to the excise duty. These issues have already been settled by various judgments of this Court, the latest one being CCE, Bangalore I v. Bal Pharma Limited, Bangalore and Ors., 2011 2 SCC 620. Because of this reason Mr. Lakshmikumaran, Learned Counsel appearing for the Appellant, rested his arguments on another aspect altogether i.e. pertaining to the cost of the samples. He submitted, in the first instance, that even if these are exigible to excise duty, these samples have to be treated at zero cost because of the reason that the cost of manufacturing of these samples is already taken into account and added in the manufacture of those medicines which are sold in the open market. We find that this argument also does not have any merit as identical argument was rejected by this Court in Bharat Heavy Electricals Ltd. v. CCE., I Indore, 2003 154 ELT 10.
(2.) The only question is as to whether the valuation has to be pro rata or on the cost basis. We may point out at the outset that in the case of Medley Pharmaceuticals Ltd. v. Commnr. of Central Excise and Customs, Daman, 2011 2 SCC 601 this Court has opined that it is to be on pro rata basis. The discussion goes, somewhat, like this: "Now, coming to the valuation of the physicians' samples for the purpose of levy of excise duty, in our view, this issue need not detain us long in view of the decision of this Court in CCE v. Bal Pharma Ltd. This Court has upheld the conclusion of the Tribunal that the physicians' samples have to be valued on pro rata basis. The Tribunal, while arriving at the aforesaid conclusion, had relied upon its earlier decision in CCE, Calicut v. Trinity Pharmaceuticals (P) Ltd. which has been accepted by the Department. Therefore, we hold that physicians samples have to be valued on pro rata basis for the relevant period."
(3.) Mr. Lakshmikumaran, Learned Counsel pointed out that while arriving at the aforesaid conclusion, the Court took into consideration its decision in Bal Pharmaceutical Ltd. He took us through the judgment of Bal Pharmaceutical. A perusal thereof would demonstrate that there were two sets of appeals which were decided in -the said decision. In the first set of appeals the Court took note of the Tribunal's judgment in CCE, Calicut v. Trinity Pharmaceuticals P. Ltd.,2005 188 ELT 42 and with the observations that the said decision of the Tribunal was accepted by the Revenue, appeal of the Revenue was dismissed. There is no discussion of the Tribunal's decision in Trinity case. Because of this reason he took us to the judgment of the Tribunal in Trinity Pharmaceuticals Pvt. Ltd. and pointed out that in that case the Tribunal had adopted cost method and not pro rata method. Therefore some clarification on legal aspect is required.;