Statutory price control governs excise valuation; higher sale price cannot replace the controlled assessable value.

Where excisable drugs were subject to a statutory price control order, the controlled price governed assessable value under Section 4 of the Central Excise Act, 1944, and the higher amount actually recovered from buyers could not be treated as the normal price. On that basis, the valuation adopted in the impugned order was unsustainable. Once the controlled price was accepted as the correct assessable value and no duty evasion remained, penalty on the assessee and its employees could not be maintained. As the duty burden had already been passed on, no refund was payable.

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Issues: (i) Whether, for goods whose maximum retail price was fixed under the Drugs (Price Control) Order, 1987, the assessable value under Section 4 of the Central Excise Act, 1944 was the price fixed under the price control order or the higher actual sale price recovered from buyers. (ii) Whether, once the assessable value was taken at the controlled price, the assessee and its employees were liable to penalty and whether any refund could be claimed.

Issue (i): Whether, for goods whose maximum retail price was fixed under the Drugs (Price Control) Order, 1987, the assessable value under Section 4 of the Central Excise Act, 1944 was the price fixed under the price control order or the higher actual sale price recovered from buyers.

Analysis: The controlling legal principle applied was that where the price of a drug or commodity is fixed by law, the statutory or deemed price governs valuation and the higher amount actually realised cannot be treated as the normal price. On that basis, the price fixed under the Drugs (Price Control) Order, 1987 had to be adopted as the assessable value.

Conclusion: The assessable value was the price fixed under the Drugs (Price Control) Order, 1987 and not the higher actual sale price.

Issue (ii): Whether, once the assessable value was taken at the controlled price, the assessee and its employees were liable to penalty and whether any refund could be claimed.

Analysis: If there was no duty evasion because the controlled price was the correct assessable value, the foundation for penalty on the assessee and its employees disappeared. As the duty incidence had already been passed on, refund did not arise.

Conclusion: Penalty was not leviable and no refund was payable.

Final Conclusion: The valuation adopted in the impugned order was unsustainable, the penalty demand failed, and the appeals were allowed.

Ratio Decidendi: Where the price of excisable goods is fixed by law, that controlled or deemed price, and not the higher amount actually recovered, is the assessable value for excise purposes; in the absence of duty evasion, penalty cannot be sustained.

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