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Exchange Rate for imported goods is Rs 74.03 Per Pound Sterling and Rs 51.22 Per Yen-Exchange Rate for export is Rs 72.45 Per Pound Sterling and Rs 49.94 Per Yen-Customs Non-Tariff Notification No.128 Sensex slips further and closes at 8773 100 per cent EOUs allowed to export non-basmati rice-DGFT Notification No.59 Customs duty of 5 per cent imposed on import of Pig Iron, spiegeleisen, semi-finished products, flat products & long products Import of Crude Soyabean Oil subjected to 20 per cent customs duty- no change in import duty on refined soyabean oil-Customs Tariff Notification No.122 Time-limit for filing refund of service tax extended to 6 months-Service Tax Notification No.32 Rahul Bajaj asks Industry to prepare for the worst Tariff Value for import of Brass Scrap is 3525 and for poppy seeds 5206-Customs Non-Tariff Notification No. 127 CBEC clarifies the entire amount of duty paid by the manufacturer, as shown in the invoice would be available as credit irrespective of the fact that subsequent to clearance of the goods, the price is reduced by way of discount or otherwise-Central Excise Circular No.877 Mandavariya (Kishangarh), District Ajmer notified for Unloading of imported goods and loading of export goods-Customs Non-Tariff Notification No.117 SC Ruling-the entitlement of benefit in terms of Section 32AB, Section 80HH and Section 80I of the Income Tax Act- conversion of Jumbo rolls of photographic films into small flats and rolls in the desired sizes amounted to manufacture/production-AIT-2008-413-SC SC Ruling-Whether any "gift" arose in terms of Section 2(xii) of the Gift-tax Act, 1958 on the allotment of rights issue by the appellant company to its shareholders vide Board's Resolution- Whether there was any element of "gift" as defined under Section 2(xii) in the appellant issuing Bonus shares in the ratio of 1:23-AIT-2008-412-SC DEPB benefit allowed on export of cement and steel-DGFT PN 108 exports of cement in all types and forms and primary steel products eligible for export incentives under Focus Market Scheme-DGFT Notification No.58 Import of Marble Tiles-DGFT Notification No.57 Clarification on setting up Duty Free Shops approved by FIPB-Customs Circular No.19 HC Ruling-Income Tax-"reserves" arising out of the acquisition of the business of Tata Cellular Limited could never have the character of "income" in the hands of the petitioners-pre-requisite condition contained in proviso to section 147 to enable the re-assessment to be opened after period of 4 years have elapsed have not been met-AIT-2008-410-HC HC Ruling-Central Excise- valuation of the goods for the purpose of excise duty and whether excise duty was chargeable under Section 4 or Section 4A of the Central Excise Act 1944-while construing rule 3, who are excluded are only the institutional or industrial consumers as explained in Rule 2A and the industrial or institutional consumers in terms of the proviso to rule 2(p) for the purpose of chapter-II are the same-If the person who purchase the prepacked commodity not directly from the manufacturer or packers, they are consumers and the declaration will be of no effect-AIT-2008-408-HC Government considering imposition of import duty on steel Bad News for Consulting Engineers- whether turnkey contract can be vivisected?- The conclusion in Daelim case on the point, prima facie, being not in accordance with law, matter goes to Larger Bench-AIT-2008-405-CESTAT Larger Bench of CESTAT rules Credit is admissible on an input service relating to the business-AIT-2008-407-CESTAT credit of the service tax paid on the outdoor catering (canteen) service is admissible as input service under Rule 2(l) of the Cenvat Credit Rules, 2004-AIT-2008-406-CESTAT The payment for use of "services for MTNL/other companies via the interconnect/port/access/toll by the assessee would not fall within the purview of payments as provided for under section 194J of the Act, so as to be eligible for tax deduction at source-The interconnect charges/port access charges cannot be regarded as fees for technical services-AIT-2008-404-HC Computation of Value under Section 14 for Levy of Export Duty - Customs Circular No. 18 Advance Ruling- Whether the service fee paid by the applicant to Intertek Testing Management Limited UK under Global Management Service Agreement is taxable as "Royalties & Fee for Technical Services" as per the provisions of Article 13 of DTAA between India & UK? Whether the applicant is required to deduct tax at source on the service fee paid to Intertek Testing Management Limited, UK, at the rate of 10% plus applicable surcharge and cess as per the provisions of section 115A(1)(b)(BB) of the Income-tax Act-AIT-2008-401-AAR Larger Bench of SC Ruling-whether the revenue can be precluded from filing an appeal even though in respect of some other years involving identical dispute no appeal is filed -AIT-2008-403-SC SC Ruling-whether transfer of Banking Undertaking gave rise to taxable capital gains under Section 45 of the 1961 Act-it was not possible to compute capital gains and, therefore, the said amount of Rs. 10.20 cr. was not taxable under Section 45 of Income Tax Act-AIT-2008-400-SC Export duty of 8 per cent notified in place of earlier rate of Rs. 200 per tonne on export of iron ore fines-Customs Tariff Notification No.121 Pan Masala Packing Machines (Capacity Determination And Collection of Duty) Second Amendment Rules, 2008-Central Excise Non-Tariff Notification No.45 SC rules Ethylene and propylene manufactured by the assessee and used in its factory in the further manufacture of the same goods would be entitled to the benefit of exemption contained in notification no.217/86-AIT-2008-398-SC New DEPB Rates on export of all products notified–DGFT PN 102 service tax paid under Section 66A is available as 'input credit' under Cenvat Credit Rules, 2004 provided the said services are used as input services by the manufacturer or producer of final products or a provider of output taxable service-Service Tax Trade Notice No.43/2008 Anti-dumping duty imposed on import of cable ties from China & Taiwan-Customs Tariff Notification No.118 Definitive Anti-dumping duty imposed on import of Phenol from Singapore, South Africa & European Union-Customs Tariff Notification No.114 High-tech products entitled to benefits under High-Tech Products Export Promotion Scheme –DGFT PN 101

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Valuation of Physician Samples under Rule 4: HC

AIT News Network

NEW DELHI. Dismissing the Petition filed by Indian Drugs Manufacturers Association; High Court has upheld the validity of CBEC Circular No.813 dated 25^th April 2005 and has ruled that the valuation of physicians samples cleared for free distribution be determined under Rule 11 read with Rule 4 of Central Excise valuation (determination of Price of excisable Goods) Rules,2000 and such a valuation would be reasonable and consistent with the principles and the general provisions of the Rules and the Act.

T H E R U L I NG:

Rule 5,6,7,9 & 10 of 2000 Rules are not applicable to the physicians free samples because rule 5,6,7,9 & 10 apply to cases where the goods are sold whereas physicians samples are not sold.Therefore, the question is, which of the remaining Rule 4, 8 & 11 of the 2000 Rules would be applicable for the valuation of physicians free samples.
The physicians samples cannot be valued under Rule 8, because physicians samples are not cleared for use and consumption in the production or manufacture of other articles. Rule 8 applies to cases, where the goods are not sold but are cleared exclusively for use and consumption in the production or manufacture of other articles. Admittedly, the physicians samples are cleared for free distribution to the medical practitioners and are not cleared for use and consumption in the production or manufacture of other articles and, therefore, the method of valuation provided under Rule 8 cannot be applied for the valuation of physicians free samples. Thus, the remaining rules, namely rule 4 and rule 11 are the only two rules that can be applied for the valuation of physicians free samples.
Rule 4 is a general rule and provides that the valuation of excisable goods that are not sold and delivered at the time and place of removal shall be based on the value of such goods sold and delivered at any other time nearest to the time of the removal of goods under assessment. The word ‘such goods’ in Rule 4 clearly means that the goods in question must be similar or identical to and have same quality or character to the goods sold and delivered. In other words, what Rule 4 provides is that in all cases where the goods are not sold and delivered at the time and place of removal, its valuation is to be made by taking the value of such goods sold and delivered at the time nearest to the time and place of removal of the goods in question.
Rule 4 squarely applies to the clearances of physicians free samples, because, physicians samples are not clearances by way of sale and delivery at the time and place of removal and such goods meaning thereby goods similar or identical to physicians samples are also sold and delivered at the time and place of removal. By the very nature, the physicians samples have to be strictly identical to the goods which are cleared on sale in the wholesale trade. In fact, by distributing physicians samples freely, the assessee represents to the physicians that the product same physical and chemical properties, composition, potency, etc. Thus, the physicians samples cleared for free distribution are liable to be valued under Rule 4 on the basis of the value of such goods sold and delivered at any other time nearest to the time and place or removal of the physicians samples.
The argument that Rule 4 applies only to goods sold but not delivered to the buyer at the time and place of removal cannot be accepted because, Rule 4 is a general rule and does not contain any words which warrant such restricted meaning. The fact that Rule 4 permits adjustments in the value on account of the difference in the dates of delivery of such goods, if any, it cannot be inferred that Rule 4 is restricted to goods sold but not delivered at the time and place of removal. By use of the words "if necessary" in Rule 4, it is made clear that the adjustments shall be permitted wherever necessary. In other words, Rule 4 would also cover cases where such adjustment is not necessary. To put it simply, there is nothing in Rule 4 to suggest that it applies only to goods sold but not delivered at the time and place of removal.
The fact that rule similar to Rule 6 (b)(i) of 1975 Rules is not to be seen in 2000 Rules would not preclude the revenue from valuing the physicians samples under Rule 4 especially when rule 4 of the 2000 Rules is similar to Rule 4 of 1975 Rules. Therefore, valuation of physicians samples under Rule 4 of 2000 Rules would be reasonable and in consonance with the principles consistently followed in the last three decades.
The contention that Rule 8 is the only rule which deals with the instances where the goods are not sold and,therefore, Rule 11 with the spirit of Rule 8 have to be applied to the physicians samples cannot be accepted because Rule 8 applies to cases where the goods are not sold but are consumed captively in the manufacture of other articles. In the cases of physicians samples, the clearances are not for captive consumption and moreover, goods similar or identical to physicians samples are sold in the market. Therefore, the question of applying the spirit of Rule 8 does not arise at all.
The fact that the Board had issued a Circular No.643 dated 1/7/2002 directing that the physicians samples be valued under Rule 8 does not mean that the revenue cannot withdraw that circular even if it is found to be was erroneous and issue a circular which is in consonance with the Act and the Rules made thereunder.
The argument of the petitioners that the physicians samples are distinct from the goods sold in the market is without any merit. The physicians free samples must be similar or identical to the goods that are sold in the wholesale trade. If the physicians samples are not similar or identical to the goods that are sold in the wholesale trade, then the consequences will be disastrous, because, the physicians prescribe medicines based on the free samples supplied by the assessee. The fact that the physicians samples may be distributed in a different pack or in a different bottle would not make the physicians samples different from the goods sold in the open market. The difference in the size or quantity may entitle the assessee to some adjustment in the value, however, that would not make the physicians samples to be distinct from the goods sold in the open market. In other words, irrespective of the fact that the physicians samples are distributed in a pack different from the pack that is sold in the market, the valuation of the physicians free samples have to be determined under Rule 4 by applying the valuation of such goods sold in the open market.
Rule 4 is the only general rule and,therefore, it is just and proper to hold that the valuation of physicians 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 physicians 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 physicians samples are in fact sold in the open market and in fact physicians samples are not cleared for captive consumption. Hence the valuation of physicians samples cannot be determined under Rule 11 read with Rule 8 of the 2000 Rules.
( Click here for full text of ruling AIT-2006-190-HC )