Exemption notification election under price control rules cannot be forced across all clearances; penalty also set aside.

Notification No. 245/83-C.E. was treated as an exemption scheme that the assessee could either accept for all eligible medicines covered by the relevant price list or decline in favour of assessment under Section 4 with normal abatements. The department could not compel uniform adoption of the notification across all clearances merely because some medicines had been claimed under it; if the assessee did not opt consistently, the proper course was refusal of approval under the notification rather than forced application. On the facts, penalty was also unwarranted because the dispute concerned a permissible choice between lawful assessment routes. The impugned order was set aside and the price lists and penalty were to be reconsidered.

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Issues: (i) Whether an assessee manufacturing medicines covered by the Drug Price Control Order could be compelled to avail Notification No. 245/83-C.E. for all such medicines if it had claimed the notification only for some clearances and assessment under Section 4 for others; (ii) Whether penalty was warranted on the facts.

Issue (i): Whether an assessee manufacturing medicines covered by the Drug Price Control Order could be compelled to avail Notification No. 245/83-C.E. for all such medicines if it had claimed the notification only for some clearances and assessment under Section 4 for others.

Analysis: Notification No. 245/83-C.E. is an exemption notification. The condition in clause (iii) of the proviso requires the exemption to be claimed in respect of all medicines covered by the relevant price list if the assessee chooses that route. However, the notification does not authorise the department to force the assessee to adopt the exemption for all goods. The assessee may choose either to take the benefit of the notification for all eligible medicines or to have assessment made under Section 4 with the normal abatements. If the assessee does not opt uniformly for the notification, the proper course is to refuse approval of the price list under that notification, not to impose the notification on the remaining clearances.

Conclusion: The assessee could not be compelled to adopt the notification for all medicines, and the demand based on forcing uniform application of the notification was unsustainable.

Issue (ii): Whether penalty was warranted on the facts.

Analysis: The record disclosed no basis for imposing penalty in the circumstances, as the dispute concerned the assessee's entitlement to choose between two lawful assessment routes under the exemption scheme.

Conclusion: Penalty was not justified and was set aside.

Final Conclusion: The assessee was entitled to choose between exemption under Notification No. 245/83-C.E. for all covered medicines and assessment under Section 4 for the whole class, and the impugned order was set aside with directions for reconsideration of the price lists and deletion of penalty.

Ratio Decidendi: Where an exemption notification confers a conditional benefit tied to all covered goods, the assessee retains the election either to adopt that notification uniformly or to proceed under the normal assessment provision, and the department cannot compel partial or inconsistent adoption of the exemption.

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