Ex-factory price governs set-off computation; quashed executive instructions cannot reduce the exemption under the notification.

Ex-factory price was the correct basis for computing assessable value for set-off under Notification No. 198/76 because wholesale dealers' price included excise duty, fertilizer pool contribution, equalised freight and dealers' margin. The attempted reduction in exemption through executive instructions could not be applied after those instructions had been quashed by the High Court, so the notification had to operate on its full terms. The assessee was therefore entitled to the full rebate and succeeded on the issue.

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Issues: Whether, for grant of set-off under Notification No. 198/76, the ex-factory price was the correct basis for computation of assessable value and whether the reduction in exemption under executive instructions could be applied.

Analysis: The appellate authority accepted that the duty liability had to be worked out on the ex-factory price and not on the wholesale dealers' price, since the latter included excise duty, fertilizer pool contribution, equalised freight and dealers' margin. It further held that the marginal reduction in the rate of exemption under executive instructions issued by the Central Board of Excise & Customs could not be acted upon after those instructions had been quashed by the High Court. The notification, therefore, had to be applied on its full terms.

Conclusion: The ex-factory price was to be taken as the basis for the set-off, the full rebate under the notification was admissible, and the assessee succeeded.

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