1998 (8) TMI 152 - AT - Central Excise

Summary

Issues Involved:
1. Determination of Assessable Value
2. Applicability of Exemption Notification No. 245/83
3. Wholesale vs. Retail Price for Duty Calculation
4. Compliance with Section 4(1)(a) of the Central Excises and Salt Act, 1944

Detailed Analysis:

1. Determination of Assessable Value:
The appellants, engaged in manufacturing drugs and pharmaceuticals, contend that the assessable value should be based on the wholesale price at which they sell to independent buyers, as per Section 4(1)(a) of the Central Excises and Salt Act, 1944. They argue that the Department's insistence on using the retail price, minus a 15% discount as per Notification No. 245/83, results in a higher duty liability, which contradicts the notion of an exemption.

2. Applicability of Exemption Notification No. 245/83:
The Notification No. 245/83 provides an exemption for patent or proprietary medicines by allowing a 15% discount on the retail price for duty calculation. The appellants have not claimed this benefit, arguing that the notification's conditions are not met and that it should not be compulsorily applied by the Department. The Tribunal noted that the notification is optional and should not result in a higher duty than what would be payable under Section 4(1)(a).

3. Wholesale vs. Retail Price for Duty Calculation:
The appellants maintain that their goods are sold in wholesale, and the retail price listed is merely for compliance with the Drug (Prices Control) Order. The Department's argument that the retail price, which includes excise duty, should be the basis for assessable value was rejected. The Tribunal held that the retail price cannot be used for assessable value determination in the absence of retail sales.

4. Compliance with Section 4(1)(a) of the Central Excises and Salt Act, 1944:
The Tribunal emphasized that the assessable value should be based on the price at which goods are ordinarily sold in the wholesale market. The notification in question does not override Section 4(1)(a). The Tribunal referenced previous judgments supporting the position that manufacturers cannot be compelled to adopt the notification's valuation method if it results in a higher duty.

Conclusion:
The Tribunal concluded that the assessable value should be determined based on the wholesale price as per Section 4(1)(a), not the retail price minus a 15% discount as per Notification No. 245/83. The appeals were allowed, and the impugned order was set aside, affirming that the appellants cannot be forced to avail the exemption notification, especially when it results in a higher duty liability.