Customs, Excise and Gold Tribunal - Delhi
Ramsay Pharma vs Collector Of Central Excise on 28 January, 1998
Equivalent citations: 1998(101)ELT448(TRI-DEL)
ORDER
U.L. Bhat, J. (President)
1. These appeals are directed against two separate original orders passed by Additional Collector of Central Excise confirming demands of duties on P & P medicines manufactured by the appellant and cleared during the period 1982 to 1984 and 1984-85 respectively.
2. Appellant is availing the benefit of Notification No. 161/66 till 17-11-1983 when Notification was replaced by Notification No. 245/83, dated 13-9-1983 and thereafter availed the benefit of latter notification. Under these Notifications the Government exempted a part of the duty payable on the medicines as calculated on the basis of assessable value under Section 4 of the Central Excise Act, 1944 at the Tariff rate of duty. The Notification exempted that part of the duty as is in excess of the amount of duty calculated as indicated in the Notification. This, we may call the limit of exemption. The limit is to be calculated on the basis of the value of medicines arrived at after allowing a discount of 15% on the retail price of the medicines specified in the price lists referred to in paragraph 19 of the Drugs Price (Control) Order, 1979. In other words, the duty payable at the Tariff rate on the basis of the Government fixed retail price list less 15% is to be calculated. This amount of duty would have to be paid by the manufacturer and the excess beyond this limit out of the duty payable on the value under Section 4 of the Act is exempt.
3. Appellant was filing successive price lists indicating the statutory retail price in column 4, the amount of basic duty and special duty to be deducted, the actual amount equal to 15% required to be deducted from the retail price. The price lists declared the value claimed for approval as the amount arrived at after deducting, first the element to duty on the cum-duty retail price and thereafter the amount equal to 15% as indicated in the notification.
4. Show cause notices were issued stating that actually appellant was not allowing 15% trade discount to all the buyers and therefore, deduction of trade discount can be made only of the actual discount granted to buyers. On such a computation, it was found that the assessable value would be higher than what was declared by the appellant and duty paid was less than the duty actually payable. Show cause notices proposed demands of differential duty on this basis. Though appellant resisted the demands, the Additional Collector confirmed the demands. Hence these appeals.
5. Shri K. Srivastava, SDR explained that the trade discount of 15% referred to in the price lists was the declared trade discount and assessable value would be computed on that basis, though actual trade discount was being extended at varying rates to different customers and therefore, only the actual trade discount allowed should have been deducted. This submission is correct, if one is at the task of determining the assessable value under Section 4 of the Act. In a case like the present one, from the practical point of view, it is unnecessary to determine the assessable value under Section 4 of the Act; that is because exemption is granted in respect of the duty in excess of the duty calculated on the basis of the statutory retail price, as contemplated in the notification. From the practical point of view, it is sufficient to arrive at the limit of exemption by taking the Government fixed retail price, treating it as cum-duty price, deducting the duty payable, deducting 15% of such amount and arriving at the net value and compute duty at Tariff rate on such value. That was precisely what the appellant did in the price lists. The price lists arrived at the assessable value based on the retail price after deducting the duty element and the statutory discount of 15% (not trade discount). Duty calculated on such amount had to be paid under the notification and appellant did pay such duty. The question of trade discount is relevant only in determining the assessable value under Section 4 of the Act and such determination is not necessary for finding out the amount of duty payable by the appellant under the notification.
6. It is contended by Shri K. Srivastava, SDR that the statutory price and the actual price at which the appellant sold the medicines to wholesaler should be equal and this is the condition in proviso (2) to the notification. This is not correct. What proviso (2) requires is that the statutory price list should represent the retail price at which the medicines are ordinarily sold. Section 4 deals with wholesale price. The wholesale price collected by the appellant cannot be equated with the statutory retail price in the price lists. The department has no case that the retail price for the medicines manufactured by the appellant was not the same as the statutory price. Therefore, no case of violation of proviso (2) has been made out.
7. For the reasons aforesaid, we find that the appellant had paid correct amount of duty under the notification. The impugned orders are not sustainable and are set aside. The appeals are allowed. Cross-objection being merely supportive is dismissed.