C.N.B. Nair, Member (T)

1. This appeal is directed against Order-in-Original No. 23/2001, dated 27-8-2001 passed by the Commissioner of Central Excise, Delhi-Ill. The order impugned has been passed pursuant to this Tribunals Final Order No. 799/2000-A, dated 12-9-2000 [2000 (121) E.L.T. 265 (Tribunal)]. That order of the Tribunal dealt with duty demands arising out of findings relating to non-duty paid clandestine removal of medicines and nonpayment of duty on physicians sample. The Tribunals order decided the issue relating to clandestine removal and remanded the issue relating to computation of duty payable on the samples. Thus, the issue relating to clandestine removal remains finalised by our earlier order. In the present appeal only issue relating to duty on the clearances of physicians sample remains to be considered.

2. We have perused the records and have heard both sides. The only issue in dispute in regard to demand for duty on sample is whether the Commissioner was right in making an addition of 10% to the value of commercially sold medicines so as to arrive at the assessable value of physicians samples. What prevailed with the Commissioner for making such an addition is that "cost of packing for samples would obviously be higher as they have to have special labels such as "Physicians sample not for sale" and other promotional literature". The contention of the learned Counsel for the appellant is that goods, which are not sold, are required to be assessed at the normal price at which other consignments of same goods are sold. In the present case, physicians samples, which are distributed, free to physicians is the same as the medicines which are sold. Therefore, price of the sold medicines should be the basis for the valuation of physicians samples. The learned Counsel has also taken a contention that value of freely distributed goods remains included in the assessable value of goods which are not sold and in that view of the matter no duty demand is justified on freely supplied goods.

3. The learned SDR has pointed out that the issue relating to durability of physicians samples remains settled by the decision of this Tribunal in the case of Crosslands Research Lab. Ltd. v. Commissioner of Customs & Central Excise, Pune-Il [2002 (150) E.L.T. 212 (Tri. - Mumbai). She has further submitted that it is well settled that all removals of manufactured goods, irrespective of the nature of supply, whether for obligatory warranty services, as compliments, etc., are required to be subjected to central excise duty as duty of excise is on manufacture and not on sale or realisation of price. She has relied on the decision of this Tribunal in the case of Bharat Heavy Electricals [1999 (112) E.L.T. 246] in support of this contention. She has also pointed out that this decision has been confirmed by the Apex Court [2003 (154) E.L.T. 10].

4. The issue relating to durability of free supplies is no more res integra, The learned SDR is right in the contention that it is in the very nature of excise duty i.e. a duty on manufacture that the method of disposal of the goods, whether through sale or free distribution, is of no relevance to the issue of charging central excise duty. This position remains settled by the decision of this Tribunal in the case of physicians samples in the case of Grasslands Research Lab. Ltd, and in the case of free supply/warranty obligation in the case of Bharat Heavy Electricals Ltd. v. Commissioner [1999 (112) E.L.T. 246]. The decision of the Tribunal in the case of Bharat Heavy Electricals Ltd. remains affirmed by the Apex Court [2003 (154) E.L.T. 10]. Thus, the appellants have no case on this score. However, they are right in their contention that further addition of 10% to the sale price of medicines was not justified. The goods are required to be subjected to duty based on their normal value. In the present case, same medicine is disposed of both by sale and through free distribution. The sale price has also been accepted as normal value and approved as assessable value and the appellants have been paying duty on the sale price. There is no reason to hold that free supply medicines would fetch a higher price, in case they were sold. Therefore, freely supplied medicines are also required to be assessed at the value at which goods sold in ordinary course of trade were assessed. Both sides agree that the amount of duty payable on such assessment would be Rs. 4,24,263/-. Duty demand to this extent is confirmed. Subject to this relief, the impugned order is upheld.