DOLLAR COMPANY MADRAS Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) The appellant-company, who is the writ petitioner, is a manufacturer of certain ointments which are sold by it at retail prices at Rs. 4.50, Rs. 3.37 and Rs. 3.00. These are ointments for skin troubles, which admittedly are patent and proprietary medicines as defined under Entry 14-E of the First Schedule to the Central Excises and Salt Act, 1944. Admittedly, these products were subjected to excise duty only in 1961. It is not now in dispute that even after the excise duty came to be levied for the first time since 1961, the medicinal products are sold by the Company at the same old price. In other words, the excise duty paid by the Company is on the footing that the prices of the different sizes of tubes are Rs. 4.50, Rs. 3.37 and Rs. 3.00 respectively.

(2.) A Notification came to be issued on 8th October, 1966, being Notification No. 161/66, dated 8th October, 1966 in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944. By this Notification, the patent or proprietary medicines falling under Item 14-E of the First Schedule to the Central Excises and Salt Act, 1944, hereinafter referred to as the Act, were exempted from so much of the duty of excise leviable thereon as is in excess of the duty calculated on the basis indicated in Clauses (i) and (ii) of the Notification. Clauses (i) and (ii) along with the relevant Explanation read as follows :-

(3.) Now according to the appellant, it had not added any amount by way of excise duty to the price which it was charging the retail consumer and, therefore, the company was entitled to deduct a discount of 25 per cent from Rs. 4.50, Rs. 3.37 and Rs. 3.00 respectively. The contention of the department, however, was that in the price list these prices have been shown by the appellant as including the excise duty and therefore, for the purposes of ascertaining the 25 per cent discount, the excise duty will have to be deducted from the retail prices shown in the price list with the result that when 25 per cent of the discount was to be given, the prices, according to the Department, should be Rs. 3.19, Rs. 2.39 and Rs. 2.13 respectively.