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Circular No. 915/05/2010-CX
F No. 6/5/2009-DS (CX-I & 4)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
***
New Delhi, 19
th
February, 2010.
To
Director General (All)
Chief Commissioners of Central Excise including LTU (All)
Commissioners of Central Excise including LTU (All)
Subject: - Clarification regarding valuation of free samples of the products covered under MRP based assessment
– reg
Sir,
Attention of field formations is invited to Board’s circular No. 813/10/2005-CX dated 25.4.2005 issued from F.No. 6/39/2000-
CX1 wherein it was clarified that in the case of free samples, the value should be determined under Rule 4 of the Central
Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
2. A larger bench of CESTAT in the case of Blue Cross Laboratories Vs CCE, Mumbai 2006(202) ELT 152 (T-LB), has also
held that physician samples are to be assessed under rule 4 of the Central Excise Valuation (Determination of Price of
Excisable Goods) Rules, 2000. Further, the aforesaid circular of 2005 has also been upheld by the Hon’ble High Court of
Mumbai in the case of Indian Drugs Manufacturer’s Association Vs. UOI, reported at 2008(222) ELT 0022 (Bom).
3. Subsequently, CESTAT in its majority decision in the case of M/s Cadila Pharmaceuticals Ltd. Vs Commissioner of Central
Excise Ahmedabad II, reported at 2008 (232) ELT 0245 (Tri.-LB), has held that even after the pharmaceutical products have
been notified for MRP assessment under Section 4A of the Central Excise Act, the assessment of free physician samples of
these products , is appropriately required to be done under Rule 4 of the valuation rules by taking into consideration the
deemed value under Section 4A(1) notwithstanding the non availability of normal price under Section 4(1)(a) of the Act, ibid.
Accordingly, the value for payment of excise duty for physician sample would be the value determined under Section 4A for the
similar goods (subject to adjustment for size & pack etc.)
4. The aforesaid decision of CESTAT would, mutatis mutandis, be applicable in respect of free samples of other products
which are under MRP assessment. Accordingly, it is clarified that valuation of Samples which are distributed free as part of
marketing strategy, or as gifts or donations, shall be determined, in terms of Board’s circular No. 813/10/2005-CX dated
25.4.2005 and the aforesaid decisions of CESTAT, as explained in foregoing paras 2 & 3, whether the final products are
assessed under MRP based assessment or otherwise.
5. Trade and Industry may be informed.
6. Receipt of this circular may be acknowledged

7. Hindi version would follow.
Yours faithfully,
(MADAN MOHAN)
Under Secretary (CX. 1)
circulars no 915 05 2010 | iKargos