Wholesale valuation of patent medicines under section 4(1)(a) prevails over compelled notification-based pricing where no wholesale price was fixed.

Assessable value of patent or proprietary medicines cleared in wholesale trade had to be determined under section 4(1)(a) on the basis of the normal wholesale price at the time and place of removal, where the statutory conditions were satisfied. Notification No. 245/83, issued as an exemption under Rule 8(1), did not alter the statutory valuation scheme and could not be compelled on an assessee, especially where it would produce a higher duty burden. In the absence of retail sales by the manufacturer and without any wholesale price fixed under the Drugs (Prices Control) Order, the retail price under that order could not displace wholesale valuation. The assessee's valuation under section 4(1)(a) was upheld.

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Issues: Whether the assessable value of patent or proprietary medicines cleared in wholesale trade was to be determined under section 4(1)(a) on the basis of the wholesale price actually charged, or whether the Department could compel adoption of the valuation mechanism under Notification No. 245/83 by reference to the retail price fixed under the Drugs (Prices Control) Order.

Analysis: The medicines were sold in wholesale trade, and the Department did not establish that any wholesale price had been fixed under the control order. Section 4(1)(a) required the normal price in wholesale trade at the time and place of removal to be adopted where the statutory conditions were satisfied. Notification No. 245/83 was an exemption notification issued under Rule 8(1) and operated only to grant exemption from duty up to a specified measure of value; it did not alter the statutory basis for determining assessable value under section 4. The notification could not be imposed compulsorily on an assessee, particularly where its application would lead to a higher duty burden than assessment under section 4(1)(a). The retail price fixed under the control order, in the absence of retail sales by the manufacturer and in the absence of any wholesale price fixed under that order, could not displace the wholesale price for valuation purposes.

Conclusion: The assessable value had to be determined under section 4(1)(a) on the basis of the wholesale price, and the assessee could not be compelled to adopt the notification-based valuation. The appeal was therefore allowed in favour of the assessee.

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