1996 (12) TMI 195 - AT - Central Excise

Summary

Issues:
1. Duty payable on goods manufactured on behalf of two concerns.
2. Rejection of price lists based on Notification No. 245/83.
3. Interpretation of Section 4 of the Central Excise Act, 1944.
4. Compulsion to avail benefit of exemption notification.
5. Conditions for claiming exemption under the notification.
6. Relevance of manufacturing other medicines not covered by price lists.

Analysis:

The judgment by the Appellate Tribunal CEGAT, New Delhi, involved a dispute regarding the duty payable on goods manufactured on behalf of two concerns. The appellants had filed price lists declaring wholesale prices and claiming deductions under Section 4 of the Central Excise Act, 1944. The issue arose when show cause notices were issued proposing to reject the price lists based on Notification No. 245/83, which granted exemption on excise duty beyond a specified limit. The Assistant Collector and the Collector (Appeals) held that the appellants were required to avail the exemption, thus negating the need for deductions under Section 4.

The Tribunal analyzed Section 4 of the Act, emphasizing that duty is to be paid on the assessable value of goods as per the provisions of the Act. The exemption notification did not alter the scheme of Section 4 but provided an exemption beyond a specified limit based on retail prices and discounts. The Tribunal clarified that in calculating duty under the notification, deductions under Section 4 were irrelevant, as the exemption was granted subject to specific conditions.

Regarding the compulsion to avail the exemption, the Tribunal highlighted the three provisos of the notification. It noted that while the exemption was subject to conditions, manufacturers were not mandated to claim it. Proviso (iii) indicated that manufacturers could choose not to claim exemption for certain medicines without forfeiting the right to claim it for others. Therefore, the appellants were justified in seeking to calculate the assessable value under Section 4 and claim deductions permitted by the Act.

The Respondent pointed out that the records did not indicate whether the appellants were manufacturing other medicines not covered by the price lists and whether they had availed the exemption for those. The Tribunal deemed this information irrelevant to the current dispute but noted that the Department could revisit the matter if the appellants had availed exemptions for other products. Ultimately, the Tribunal set aside the impugned orders and allowed the appeals in favor of the appellants.