2006 (3) TMI 634 - AT - Central Excise

Summary

Issues:
Whether the maximum price fixed in the Drug (Price Control) Order should be adopted as the basis of assessable value of bulk drugs.

Analysis:
The case involved the respondents, engaged in manufacturing bulk drugs listed in the Drug (Price Control) Order (DPCO), who sold their products at prices lower than the maximum price fixed by DPCO. The department issued show cause notices demanding differential duty from the respondents, contending that the DPCO price should be the assessable value. The jurisdictional Commissioners of Central Excise dropped the duty demand for certain periods, but for other periods, the Asst. Commissioner confirmed the demand and imposed a penalty, which was later set aside by the Commissioner (Appeals), leading to the department's appeals.

The central question was whether the price fixed in DPCO should be considered the normal price for determining the assessable value of bulk drugs. The respondents argued they could sell below DPCO prices, with the actual price being the normal price under Section 4 of the Central Excise Act. However, the appellant contended that the DPCO price, being statutorily fixed, should be the normal price. The Tribunal referred to its Larger Bench decisions in previous cases, Acme Pharmaceuticals and IPCA Laboratories, where it was held that manufacturers could sell below DPCO prices, and such lower prices would be the normal price for assessable value under Section 4. The Tribunal distinguished the Supreme Court's judgment in Aluminium Industries Ltd. cited by the appellant, affirming the position established in the earlier cases.

Based on the precedent set by the Larger Bench decisions, the Tribunal upheld the impugned order and dismissed the appeals brought by the department. The decision was pronounced in open court on March 16, 2006.