Bulk-pack excise valuation excludes split-quantity mark-up where no express authority permits its addition.

Bulk packs of patent or proprietary medicines had to be valued for central excise on the basis of the price of the goods as actually removed from the factory. The 5 per cent mark-up under the Drugs (Prices Control) Order, 1970 applied only where split quantities were sold from a bulk pack and could not be imported into valuation of bulk packs under the exemption notification. In the absence of express authority in the notification or excise law, the Department could not add that mark-up to the retail price of bulk packs for assessable value. The assessee therefore received consequential relief.

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Issues: Whether, for valuing patent or proprietary medicines cleared in bulk packs under the exemption notification, the Department could add the 5 per cent mark-up contemplated for sale of split quantities under the Drugs (Prices Control) Order, 1970, while arriving at the assessable value for central excise duty.

Analysis: The notification granted an ad hoc discount-based method of valuation, permitting assessment on either wholesale price less 10 per cent or retail price less 25 per cent. The mark-up under clause 18 of the Drugs (Prices Control) Order, 1970 was intended only to compensate a dealer selling split quantities from a bulk pack and was relevant only in that situation. The bulk packs cleared from the factory were the goods to be assessed, and they had to be valued in the form in which they were actually removed. Since no part of the split-quantity mark-up accrued to the manufacturer and there was no authority in the notification or elsewhere in the excise law to add that mark-up to bulk-pack retail prices, split quantities could not be equated with bulk packs for valuation purposes.

Conclusion: The mark-up of 5 per cent applicable to split quantities could not be added to the retail price of bulk packs for excise valuation, and the assessable value had to be based on the listed retail price of the bulk pack as such.

Final Conclusion: The appeal succeeded and the assessee obtained consequential relief.

Ratio Decidendi: Excisable goods must be valued in the form in which they are cleared, and a price mark-up meant solely for resale of split quantities cannot be imported into the assessable value of bulk packs unless the governing notification or excise law expressly authorises such addition.

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