Court rules excise duty on ex-factory prices, not agents' prices, for pharmaceuticals

The court held that excise duty should be levied on the ex-factory prices set by manufacturers, not on prices charged by selling agents, in a case concerning pharmaceutical products. The petitioners successfully argued that duty should be based on ex-factory prices for bona fide sales, not agents' prices, leading to the quashing of previous orders. The court directed the refund of excess duty paid by the petitioners, allowing the respondents to reassess duty based on ex-factory prices. The respondents were instructed to process refund applications promptly and pay the entitled amount to the petitioners within three months, with costs awarded to the petitioners.

---

---

Issues:
Assessment of excise duty on pharmaceutical products based on ex-factory prices versus prices charged by selling agents.

Analysis:
The petitioners, manufacturers of medicinal products, had previously filed writ petitions regarding the assessment of their products under the Central Excises and Salt Act. The court held that excise duty should be levied on the ex-factory prices set by the manufacturers, not on the prices charged by selling agents in the market. The Superintendent of Central Excise had approved the petitioners' price list showing fixed prices for sale to their agents. However, following an amendment to Section 4 of the Act, the department demanded a price list based on agents' prices. The petitioners paid the duty under protest and sought refunds, which were denied by the Assistant Collector and the appellate Collector.

In the current petition, the petitioners argued that previous judgments established that excise duty should be based on ex-factory prices for bona fide sales, not on agents' prices. They contended that the department misinterpreted the amended provisions of Section 4 and wrongly insisted on agents' prices. The appellate Collector's reliance on a notification regarding the petitioners' prices was deemed irrelevant to the agents' prices. The court agreed that duty should be calculated on ex-factory prices set by the manufacturers, not on agents' prices, leading to the quashing of previous orders and directing the refund of excess duty paid by the petitioners.

The court clarified that the respondents could reassess the duty payable by the petitioners based on ex-factory prices. The impugned orders were set aside, and the respondents were instructed to consider refund applications according to the ex-factory prices. The respondents were required to complete the assessment as per the court's directions and pay the entitled amount to the petitioners within three months. Additionally, the petitioners were awarded costs for the petition.

---