1986 (9) TMI 193 - AT - Central Excise

Summary

Issues:
Valuation of excisable goods under section 4 of the Central Excises & Salt Act, 1944 in the case of manufacture on behalf of a brand owner.

Detailed Analysis:

1. The judgment involved seven Revision Applications filed by the appellants before the Government of India, later transferred to the Tribunal. The issue was whether the valuation of excisable goods should be based on the manufacturer's prices to the brand owner or the brand owner's prices to buyers.

2. A preliminary point was raised regarding the plea of brand name not being raised before the Assistant Collector. However, it was clarified that the plea was raised before the Appellate Collector and duly considered, thus allowing the appellants to raise the plea.

3. The appellants argued that they are liable to duty on ex-factory prices, with the plea relating to brand name following from this basic argument. They cited various judgments to support their position, emphasizing their liability to duty based on ex-factory prices minus post-manufacturing expenses.

4. The Department contended that the issue of brand owners is distinct from other cases and should be assessed under section 4(1)(b) on a best judgment basis due to the special tie-up between manufacturers and brand owners.

5. The Tribunal considered the facts and submissions, concluding that duty is leviable on the prices of the manufacturer to the brand owner, as established in a previous decision. The Department's argument that the manufacturer and brand owner arrangement should be considered a special tie-up under section 4(1)(b) was rejected.

6. The Department also argued that the transactions between the manufacturer and brand owner were not at arm's length, but the Tribunal disagreed, citing a decision of the Bombay High Court to support its position.

7. The judgment referenced a Supreme Court decision, Jt. Secretary to Government of India v. Food Specialties, which settled the issue of brand owners. The Supreme Court held that the actual price of goods sold by the manufacturer to the brand owner should determine the value for excise duty purposes.

8. Based on the analysis and precedents cited, the Tribunal allowed all the appeals, ruling in favor of the appellants regarding the valuation of excisable goods in cases of manufacture on behalf of a brand owner.