Excise valuation under price control uses actual realised sale price when sales fall below a lawful ceiling price.

For excise valuation under Section 4(1)(a)(ii), where bulk drugs are governed by a control order that fixes only a maximum sale price, sales below that ceiling are to be valued on the actual price realised by the manufacturer. The statutory deeming rule treats the price fixed under law as the relevant normal price, but where the law prescribes only a ceiling, a lawful sale below that limit remains the operative price for valuation. The contrary view was not applied on these facts, and valuation on the ceiling price was rejected in favour of the assessee.

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Issues: Whether, for valuation under Section 4(1)(a)(ii) of the Central Excise Act, 1944, excisable bulk drugs governed by the Drugs (Price Control) Order, 1995 are to be assessed at the actual sale price realised by the manufacturer when that price is below the maximum price fixed under the Order, or at the maximum price fixed under the Order.

Analysis: The valuation provision deems the normal price to be the price fixed under law or the maximum price fixed under such law, as the case may be. The Court distinguished cases where a commodity was sold above a fixed controlled price from cases where the statutory control only prescribed a ceiling price. Where the law merely fixes a maximum price, sales below that ceiling remain lawful and such realised price answers the description of the price fixed under the governing law. The earlier contrary view was held not to be applicable on the facts, and the decisions supporting valuation on the actual realised price below the ceiling were accepted.

Conclusion: The duty demand could not be sustained on the basis of the maximum price fixed under the Drugs (Price Control) Order, 1995; valuation had to be on the price actually realised by the assessee, which was below the ceiling. The issue was decided in favour of the assessee.

Ratio Decidendi: Where a control order prescribes only a maximum sale price, a sale below that ceiling is valued for excise purposes on the actual realised price, not on the ceiling price.

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