1997 (8) TMI 182 - AT - Central Excise

Summary

Issues:
1. Interpretation of proviso (ii) to Section 4(1)(a) regarding the assessable value of medicines under the Drug (Price Control) Order.
2. Application of exemption Notification 245/83 and its impact on the assessable value calculation.
3. Disallowance of trade discount deduction and its relevance in determining the assessable value.
4. Conflict between Section 4(1)(a) and the exemption Notification in assessing duty on medicines.

Analysis:
1. The case revolved around the interpretation of proviso (ii) to Section 4(1)(a) concerning the assessable value of medicines under the Drug (Price Control) Order. The Assistant Collector disallowed the trade discount claimed by the manufacturer, leading to a duty demand. However, the Collector of Central Excise (Appeals) set aside the order, prompting the department to file appeals against it.

2. The respondent relied on a Tribunal order in a similar case to support their stance that the Collector (Appeals) decided correctly. The Tribunal order highlighted that the manufacturer could choose whether to avail the exemption under Notification 245/83. The exemption was not mandatory, and the manufacturer could opt out of it, affecting the assessable value calculation.

3. The appeals contested the interpretation of proviso (ii) to Section 4(1)(a) and the impact of the exemption Notification on the statutory provisions. The contention was that once a statutory price was fixed, the assessable value should be based on that price without allowing any deductions for trade discounts. The Collector (Appeals) had allowed deductions, which was challenged by the department.

4. The Tribunal upheld the Collector (Appeals)' decision, emphasizing the correct understanding of proviso (ii) of Section 4(1)(a). It clarified that the exemption Notification could not override the main Section and that the manufacturer could choose whether to avail the exemption or calculate the assessable value based on wholesale prices. The conflict was not between Section 4(1)(a) and the proviso but between the Section and the exemption Notification. The appeals were dismissed, affirming the order-in-appeal, and any consequential benefit for the respondent would be governed by the provisions of Section 11B of the Act.