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Issues involved: Determination of excise duty on patent medicines u/s 14-E of Central Excises and Salt Act, 1944 based on a Notification issued in 1966.
Summary: The appellant, a manufacturer of patent ointments, challenged the excise duty calculation on their products sold at specific retail prices. A 1966 Notification exempted patent medicines from excess excise duty based on specified criteria. The dispute arose regarding whether the retail prices included excise duty, impacting the 25% discount calculation mandated by the Notification. The appellant argued that no excise duty amount was added to the retail prices, thus claiming a 25% discount on the listed prices. The department contended that the prices included excise duty, necessitating a different discounted price calculation. The lower authorities rejected the appellant's claim, leading to a writ petition in the High Court. The High Court analyzed the Notification's provisions and the parties' arguments. It noted that the department's stance was unsustainable as no excise duty element was added to the prices post-1961 when duty was first imposed. The Court ruled in favor of the appellant, allowing the 25% discount deduction as per the 1966 Notification. Regarding the exclusion of sales tax for discount calculation, the Court did not address this issue as it was not raised during the appeal. The department was directed to determine the excise duty amount considering the 25% discount from the price list. The writ appeal was allowed, granting relief to the appellant with costs.
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