Excise discount on retail price applies without notional duty deduction where no excise element was actually added.

Notification No. 161/66 allowed excise exemption by applying a 25 per cent discount to the retail price shown in the price list, and the Explanation applied only where an excise duty element had actually been added to that price. Where the assessee kept the retail price unchanged before and after levy of duty, and the department assessed duty on that same price, there was no factual basis to treat any duty element as embedded in the price. A mere description of the price list as inclusive of excise duty did not justify deducting a notional duty component before granting the discount.

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Issues: Whether, under Notification No. 161/66 issued under Rule 8(1) of the Central Excise Rules, 1944, the 25 per cent discount under clause (ii) had to be computed on the retail price shown in the price list without first deducting any excise duty element, where the assessee had maintained the same retail price after levy of excise duty.

Analysis: The notification allowed exemption from duty in excess of the value arrived at after allowing a 25 per cent discount on the retail price specified in the price list, but the Explanation operated only where an element of excise duty, if any, had been added to the price of the medicines. The retail prices had remained unchanged before and after levy of excise duty, and the department itself had assessed duty on the footing of those very prices. On those facts, there was no basis to infer that any excise duty element had been added to the price. The mere description of the price list as inclusive of excise duty did not justify deduction of a notional excise component before granting the 25 per cent discount.

Conclusion: The assessee was entitled to compute the 25 per cent discount on the retail price shown in the price list without deducting any excise duty element first.

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