IPCA LABORATORIES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The question that has come up for consideration before us relates to interpretation of Clause (ii) of proviso to Section 4(1)(a) of the Central Excise Act 1944. Different views had been expressed by benches of coordinate jurisdiction and, therefore, it became necessary for a Larger Bench to consider the issue.

(2.) Appellants are engaged, inter alia, in the manufacture of bulk drugs falling under Chapter 29 of the First Schedule to the Central Excise Tariff Act, 1985. The bulk drugs, namely, Frusemide, Trimethoprim, Norfloxacin, Erythromycin Estolate, Pyrantel Pamaoate and Erythomycin Sterate manufactured by the appellants are specified in the Schedule to the Drugs (Price Control) Order, 1995 (for short, DPCO). Paragraph 3(1) of the DPCO provides that the Government may with a view to regulate the equitable distribution and increasing supplies of a bulk drug specified in the First Schedule and making it available at a fair price from different manufacturers, fix from time to time a maximum sale price at which such bulk drug shall be sold. Paragraph 3(3) mandates that no person shall sell a bulk drug at a price exceeding the maximum sale price fixed under sub -paragraph (1) plus local taxes if any. Appellants had been selling the above -mentioned bulk drugs at a price lower than the maximum price fixed under DPCO. Above facts are not in dispute. The appellant paid excise duty on the price at which the above drugs were actually sold by them and not at the maximum price fixed by DPCO. They filed price declarations under Rule 173C of the erstwhile Central Excise Rules, 1944 from time to time specifying the price at which the drugs are sold. While so, show cause notice was issued to the appellant by the Central Excise authorities demanding differential duty of an amount of Rs. 32,75,573 for the period 6 -1 -95 to June 2000 on the ground that the appellant should have paid duty on the bulk drugs at the maximum price fixed by DPCO in terms of proviso (ii) to Section 4(1)(a) of the Central Excise Act, 1944. Appellant contested the demand relying on Circular F. No. 312/1/75 -CX -10, dated 8 -8 -75 and also on the decision of the Hon'ble Supreme Court in Delhi Cloth and General Mills Co. Ltd. v. UOI - 1986 (24) E.L.T. 175. The Joint Commissioner who adjudicated the show cause notice dropped the proceedings against the appellant. On appeal by the Revenue, Commissioner of Central Excise (Appeals) Bhopal under order dated 23 -10 -2003 reversed the order of adjudication and allowed the appeal following the decision of this Tribunal in the case of CCE, Indore v. Panchsheel Organics - 2002 (139) E.L.T. 319.

(3.) In order to resolve the dispute between the parties as to whether the appellant has to pay duty on the actual price at which the drugs are cleared by it or at the maximum price fixed under DPCO, it is necessary to examine the scope of Section 4(1)(a)(ii) of the Central Excise Act. Three decisions of this Tribunal, namely, Orchid Chem. and Pharmaceutical Ltd. v. CCE, Chennai - 2000 (119) E.L.T. 485; Vera Laboratories Ltd. v. CCE, Visakhapatnam - 2001 (47) RLT 1059; and Commissioner of Central Excise, Vadodara v. Abbot Laboratories (I) Ltd. - 2001 (135) E.L.T. 88 are in favour of the contention raised by the appellant, whereas contrary view is taken in Commissioner of Central Excise v. Panchsheel Organics - 2002 (139) E.L.T. 319 and Kopran Ltd. v. CCE, Pune - 2003 (156) E.L.T. 484, Relevant provisions of Section 4 of Central Excise Act read as follows :