ORDER
K.K. Usha, J. (P), Member
1. This appeal is referred for consideration by a Larger Bench for the reason that there are two conflicting views expressed by this Tribunal on the issue raised herein. After hearing both sides and going into the facts of the case in detail, it came out that the issue relating to which there are conflicting decision of this Tribunal as such does not arise in this appeal.
2. In the orders impugned the Commissioner (Appeals) took the view that even when the assessee sold the product at a price below the maximum price fixed under Drug Prices Control Order (DPCO, for short), 1995 for the purpose of computing the assessable value of the drugs under Section 4 of Central Excise Act the maximum price fixed under DPCO has to be taken as the normal price.
3. We find that the products in respect of which demand is made as duty short levied are not bulk drugs. They are formulation of drugs. This factual position is not disputed by the Revenue before us. It is further seen that the maximum price fixed under DPCO in respect of drugs is retail price and not the wholesale price. Reference to the relevant order (24.5.99) would show that sub-clause (1) of Para 9 provides for the power to fix ceiling price of scheduled formulations. Sub-clause (1) reads as follows:
“9. Power to fix ceiling price of Scheduled formulations:- (1) Notwithstanding anything contained in this order, the Government may, from time to time, by notification in the Official Gazette, fix the ceiling price of a Scheduled formulation in accordance with the formula laid down in paragraph 7 keeping in view the cost or efficiency or both of major manufacturers of such formulations and such price shall operate as the ceiling safe price for all such packs including those sold under generic name and for every manufacturer of such formulations”.
4. Para 7 refers to calculation of retail price of formulation. It reads as follows:
“7. Calculation of retail price of formulation: The retail price of a formulation shall be calculated by the Government in accordance with the following formula, namely:-
R.P.=(M.C+CC+P.M.)x(l+MAPE/100)+ED where-
“M.C” means material cost and includes the cost of drugs and other pharmaceutical aids used including overages, if any, plus process loss thereon specified as a norm from time to time by notification in the Official Gazette in this behalf.
“C.C” means conversion cost worked out in accordance with established procedures of costing and shall be fixed as a norm every year by notification in the Official Gazette in this behalf.
“P.M.” means cost of the packing material used in the packing of concerned formulation, including process loss, and shall be fixed as a norm every year by notification in the Official Gazette in this behalf.
“P.C.” means packing charges worked out in accordance with established procedures of costing and shall be fixed as a norm every year by notification in the Official Gazette in this behalf.
“MAPE” (Maximum Allowable Post-manufacturing Expenses) means all costs incurred by a manufacturer from the stage of ex-factory cost to retailing and includes trade margin and margin for the manufacturer and it shall not exceed one hundred percent for indigenously manufactured Scheduled formulations.
“E.D” means excise duty:
Provided that in the case of an imported formulation the landed cost shall form the basis for fixing its price alongwith such margin to cover selling and distribution expenses including interest and importer’s profit which shall not exceed fifty percent of the landed cost.
Explanation: For the purpose of this proviso, ‘landed cost’ means the cost of import of formulation inclusive of customs duty and clearing charges”.
5. The above would show that the ceiling price fixed in respect of drugs which are subject-matter of this appeal is retail price and not wholesale price.
6. For the purpose of valuation under Section 4 it is the wholesale price that has to be taken into consideration and not the retail price. Once it is found that the ceiling price fixed is the retail price it is not relevant for the purpose of valuation under Section 4. Therefore, on the facts of this case the demand is not sustainable. Even though the issue referred does not arise in this case, we are inclined to dispose of the appeal itself as, admittedly, no other dispute is involved. The orders impugned are set aside and the appeals are allowed.