2004 (12) TMI 429 - AT - Central Excise

Summary

Issues:
- Interpretation of Drug (Price Control) Order, 1995 (DPCO) provisions regarding pricing of bulk drugs.
- Determination of assessable value for excise duty on bulk drugs sold below maximum prices fixed by DPCO.
- Applicability of proviso (ii) to Section 4(1)(a) of the Central Excise Act in the context of pricing of scheduled bulk drugs.
- Consideration of Circulars issued by the Board in determining the normal price for excise duty calculation.

Analysis:

Issue 1: Interpretation of DPCO provisions
The case involved a dispute where the Department alleged undervaluation against the assessee for selling bulk drugs below the maximum prices fixed by DPCO. The Commissioner of Central Excise vacated the demand, stating that DPCO fixed only the maximum price, allowing manufacturers to sell at a lower price and pay duty based on the lesser price as the transaction value. The Tribunal affirmed this interpretation, emphasizing that DPCO did not rigidly fix prices but set maximum prices, enabling manufacturers to sell at lower rates.

Issue 2: Determination of assessable value
The Tribunal examined the provisions of DPCO, highlighting that manufacturers of scheduled bulk drugs were restricted from selling above the maximum price set by the Central Government. However, there was no prohibition on selling at a lower price. The Tribunal clarified that DPCO did not fix prices but established maximum sale prices. It also noted that the Central Excise Act's proviso (ii) to Section 4(1)(a) did not apply as no inflexible price was set by DPCO, emphasizing a consumer-friendly policy by the government.

Issue 3: Applicability of proviso (ii) to Section 4(1)(a)
The Tribunal analyzed the proviso (ii) to Section 4(1)(a) of the Central Excise Act, which deems the price fixed under any law as the normal price of goods. However, it concluded that as DPCO set maximum prices without fixing a specific price, the proviso did not apply in this case. The Tribunal differentiated this case from a precedent involving aluminum rods, where a fixed price was set, unlike the situation with scheduled bulk drugs.

Issue 4: Consideration of Circulars in determining normal price
The Tribunal noted that Circulars issued by the Board were relied upon to establish that selling bulk drugs below the maximum DPCO prices constituted the normal price for excise duty calculation. These Circulars were considered binding on the Revenue, supporting the Tribunal's decision to reject the appeal based on a correct understanding of legal provisions and precedents.

In conclusion, the Tribunal upheld the Commissioner's decision, emphasizing that DPCO's provisions allowed manufacturers to sell bulk drugs below maximum prices without infringing on excise duty regulations, thereby affirming the appeal rejection.