Judgment:
1. Appellant is absent in spite of notice of hearing, but has sent a request for disposal of the appeal on merits. We have heard Shri T. R.Malik, SDR and perused the papers.
2. This appeal is directed against the order passed by the Collector (Appeals) in confirmation of the order passed by the Assistant Collector.
3. Appellant, engaged in the manufacture of medicines, was entitled to the benefit of exemption Notification No. 83/83, that is, full exemption of duty on first clearances up to the value of Rs. 7.5 lakhs.
The concession had been availed during the period 1-4-1984 to 20-7-1984. The show cause notice alleged that for such clearances, appellant was not liable to pay duty and did not pay duty and, therefore, the duty not paid could not have been deducted from the wholesale price for the purpose of determining-the assessable value.
For the purpose of availing the benefit of the concession, appellant had reckoned assessable value as Rs. 7.5 lakhs, deducting the excise duty otherwise payable, but not actually paid by virtue of the exemption notification. The show cause notice alleged that assessable value has to be reckoned without deducting the exempted duty element and if so reckoned, the clearances during the period had crossed the exemption limit and duty on the excess would be payable.
4. Appellant submitted a long reply raising various contentions, including the contention that appellant was availing partial exemption of duty under Notification No. 245/83 also. It was pointed out that under Notification No. 245/83 the basis of valuation is the retail price and while arriving at the retail price, the duty element would also be included and, therefore, in determining the assessable value for the purpose of Notification No. 83 / 83, the duty element has to be deducted.
5. The Assistant Collector, accepting this contention, dropped the demand. Collector (Appeals), in the appeal filed by the Department, set aside the order passed by the Assistant Collector and confirmed the demand. Hence, the present appeal by the assessee.
6. The show cause notice proceeds on the basis that in reckoning the assessable value of the first clearances, appellant deducted excise duty element from the value and this was not justified. The stand taken by the Department is correct. So far as the first clearances of the value of Rs. 7.5 lakhs are concerned, since there was full exemption available, the duty element cannot be deducted from Rs. 7.5 lakhs to arrive at a lesser assessable value.
7. According to the appellant, the difficulty arose on account of availing of the partial exemption granted in Notification No. 245/83.
According to the appellant, the notification has altered the method of assessing the value. This stand is not correct. Notification No. 245/83 exempted patent or proprietary medicines from so much of the duty of excise leviable thereon at the tariff rate as is in excess of the amount of duty calculated on the basis of the value arrived at after allowing discount of 15% on the retail prices of the medicines specified in the price list referred to therein. This does not prescribe a method of valuation different from the methods prescribed in Section 4 of the Central Excise Act, 1944. The requirement of adopting the retail prices and discounting the same by 15% was only for the purpose of arriving at the extent of exemption. That has no impact on the assessable value of the goods cleared under the notification and, therefore, even in regard to those goods, the proper valuation under Section 4 of the Act has to be adopted in reckoning the excess over the limit of clearances prescribed in Notification No. 83/83.