COMMISSIONER OF CENTRAL EXCISE Vs. SPIC PHARMACEUTICALS DIVISION

JUDGEMENT

(1.) THE respondents are engaged in the manufacture of bulk drugs falling under Sub -Heading No. 2941.10 of the Central Excise Tariff Schedule. During 5.6.1996 - 30.6.2000, they had manufactured and sold bulk drugs at prices lesser than the maximum prices fixed by Drug (Price Control) Order, 1995 (hereinafter referred to as DPCO) and had paid duty on such lesser prices. The Department took the view that duty should have been paid on the price fixed by DPCO, taken as assessable value. Accordingly, the Department alleged under -valuation against the assessee and raised a demand of differential duty on them. This demand was contested by the assessee. In adjudication of the dispute, Ld. Commissioner of Central Excise vacated the demand, after holding that what was fixed by DPCO was only the maximum price and that it was open to the manufacturer to sell the bulk drugs at lesser price and pay duty on such lesser price taken as transaction value. Hence this appeal of the Revenue.

(2.) LD . SDR reiterates the grounds of this appeal and relies on the Supreme Court's judgment in Aluminium Industries Ltd. v. CCE, Bhubaneswar, 1998 (99) ELT 486 (SC) wherein, for aluminium rods, the price fixed by a Price Control Order was held to be the normal price of the goods. Ld. Counsel for the respondents refers to the provisions of DPCO, particularly sub -paragraph (3) of paragraph 3 thereof, and submits that the judgment cited by Ld. SDR lends no support to any view different from that taken in the impugned order.

(3.) AFTER a perusal of the DPCO provisions, we find that sub -paragraph (3) of paragraph 3 restrained manufacturers of bulk drugs (specified in the schedule to DPCO) from charging any price exceeding the maximum sale price fixed under sub -paragraph (1) plus local taxes, if any. The proviso to sub -paragraph (3) laid down that, where a price prevailed immediately before the commencement of DPCO, such price shall not be exceeded. A close reading of these provisions makes it clear that, after the commencement of DPCO, a manufacturer of scheduled bulk drugs cannot sell his drugs at a price higher than the maximum sale price fixed by Central Government under sub -paragraph (1) of para 3 of DPCO. However, there is no bar on selling the drugs at a lower price. This would mean that DPCO did not fix price for any of the scheduled bulk drugs, though it fixed a maximum price for each of such drugs. Now, we may have a look at proviso (ii) to Section 4 (1)(a) of the Central Excise Act, sought to be pressed into service by Ld. SDR. This provision, which has been reproduced in ground No. 2.1 of the "grounds of appeal" reads as under: