Excise valuation of patent medicines requires duty deduction before discount, and sales tax relief only when actually charged.

Under the valuation notification for patent and proprietary medicines, the element of excise duty, if added to the retail price, had to be deducted first and only then could the 25% discount be applied in computing assessable value. The explanation to the notification controlled the computation, and this approach was treated as consistent with the statutory concept of value excluding excise duty and trade discount. A deduction towards sales tax was not admissible because sales tax had not been separately charged or paid on the admitted facts. The excise assessment challenge therefore failed.

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Issues: (i) Whether, under the notification governing patent and proprietary medicines, the element of excise duty had first to be deducted from the retail price before allowing the 25% discount for determining assessable value; (ii) Whether deduction was admissible towards sales tax when no sales tax had been separately charged or paid.

Issue (i): Whether, under the notification governing patent and proprietary medicines, the element of excise duty had first to be deducted from the retail price before allowing the 25% discount for determining assessable value.

Analysis: The notification had to be read with its explanation, which expressly directed that the element of excise duty, if any, added to the price was to be deducted before allowing the discount. The expression used was not merely excise duty but the element of excise duty, and the explanation controlled the manner in which the assessable value was to be computed. The reasoning was also consistent with the statutory concept of value under Section 4(3)(d), where excise duty and trade discount are excluded from value.

Conclusion: The deduction of excise duty had to be made first, and only thereafter could the 25% discount be applied. The issue was decided against the assessee.

Issue (ii): Whether deduction was admissible towards sales tax when no sales tax had been separately charged or paid.

Analysis: A deduction on account of sales tax could be claimed only if sales tax had in fact been separately charged and paid. On the admitted facts, no sales tax had been separately charged.

Conclusion: No deduction towards sales tax was admissible. The issue was decided against the assessee.

Final Conclusion: The challenge to the excise assessment failed, and the writ petition was dismissed with no order as to costs.

Ratio Decidendi: Where a valuation notification expressly requires deduction of the excise duty element before granting a percentage discount, the deduction must be made in that order, and a tax deduction cannot be claimed unless the tax was actually charged or paid.

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