1996 (11) TMI 134 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 83/83 for exemption on first clearance amount.
Applicability of Notification No. 161/66 for determining assessable value.
Calculation of assessable value under Section 4 of the Central Excises Act, 1944.

Analysis:

The case involved a dispute regarding the duty payable by the respondent, a manufacturer of Patent and Proprietary Medicines, for the year 1983-84. The respondent claimed exemption under Notification No. 83/83 for the first clearance up to Rs. 7.5 lakhs. The issue arose when the department alleged that the clearance exceeded the exempted amount by Rs. 1,43,410.06. The respondent argued that they were also entitled to the benefit of Notification No. 161/66, which specified the method for determining the assessable value based on wholesale prices less a discount. The Assistant Collector recalculated the assessable value, leading to a demand for the excess amount. The Collector (Appeals) upheld the respondent's contention, prompting the Collector of Central Excise to challenge the decision.

The Tribunal analyzed the provisions of Notification No. 161/66, which provided an exemption from duty based on specific formulae for calculating the value of medicines falling under Tariff Item 14E. The notification allowed a discount of 10% on wholesale prices for determining the assessable value. However, the Tribunal clarified that the assessable value under Section 4 of the Central Excises Act should not be calculated by deducting the discount from wholesale prices fixed in the Price Control Order. The Tribunal emphasized that the value of clearances under Notification No. 83/83 must be determined based on the principles laid down in Section 4 of the Act.

Furthermore, the Tribunal noted that the respondent did not provide any evidence of offering discounts on the declared wholesale prices. As the exemption under Notification No. 161/66 was not contingent on actual discounts given, the assessable value under Section 4 of the Act should not consider the discount mentioned in the notification. The Tribunal concluded that the Collector (Appeals) erred in allowing the deduction claimed by the respondent and set aside the decision, restoring the order passed by the Assistant Collector. Consequently, the appeal was allowed in favor of the Collector of Central Excise.