K.K. Agarwal, Member (T) - (1.)THE applicant in this case is engaged in the manufacture of bulk drugs. THE duty on the same was assessed on the basis of whole sale value derived form maximum retail price. THEy are extending quantity discount in respect of formulation sold by them to their wholesale dealers. As per the scheme 10 units of a formulation were supplied to the wholesalers out of which one unit was supplied free. THE appellants' claim this as a quantity discount and accordingly determined the assessable value as per their calculation and paid the duty on the same. THEy were however issued a show cause notice disputing the manner in which the assessable value was arrived at and sought to demand duty on the basis of assessable value as determined by the department and this duty was confirmed by the Deputy Commissioner and Commissioner (Appeals) amounting to Rs. 81,38,965.20. A penalty of equivalent amount was also imposed under Section 11AC alongwith a penalty of Rs. 10,000/- under Rule 25 and a penalty of Rs. 5 Lakhs each on Shri S. Radhakrishnan & Jivan C. Patil, Director (Finance) and Excise-in-Charge of the company.
(2.)The learned advocate for the appellants referred to several decision including Bombay High Court decision in the case of Queens /chemists Mfg. Department v. C.C.E. 1979 (4) E.L.T. J 454 stating that such quantity discount is permissible. It was submitted that similar show cause notice issued to them for different period have been dropped by Commissioner (Adjudication). It was submitted that their method of determining the assessable value from the M.R.P. was correct and there has been no under valuation.
Heard both sides.

(3.)WE have considered the submissions. WE find that the lower adjudicating authorities have not denied the admissibility of the quantity discount but it is the manner in which the quantity discount has been claimed which is under dispute. WE further find that both the Revenue as well as the assessee have re-determined the assessable value from the maximum retail price declared by the aesessee on which the duty is paid but the dispute is regarding element of excise duty deductable from the Maximum Retail Price. While the appellants' contention is that the excise duty as determined on the unit price of declared M.R.P. is required to be deducted from the cum duty price, the department's contention is that the excise duty quantum has to be determined on the revised value by taking into account the free pack given on a sale of ten packs. Duty actually paid is not on the declared M.R.P. but on reduced price taking into account one free sample with every pack of ten packs supplied by the assessee. The department's contention appears to have some force. The issue is therefore arguable and contentious and it cannot therefore be said that the appellants have been able to make out a prima facie case in their favour. WE accordingly direct the appellants to deposit a sum of Rs. 15 Lakhs within 8 weeks towards duty and on such payment there shall be waiver of (ho pro-deposit of the balance amount of duty and penalty imposed on the appellants. Compliance to be reported on 29th September 2006. Failure to comply will result in dismissal of appeals without further notice.
(Pronounced in Court on 6.3.06)