1987 (2) TMI 185 - AT - Central Excise

Summary

Issues:
Determining assessable value of dry cell batteries based on sales to Philips or sales by Philips to customers.

Detailed Analysis:

The sole issue in this appeal was whether the assessable value of dry cell batteries manufactured by the Appellant for Philips India Ltd. should be determined based on the price at which they are sold to Philips or on the price at which they are sold by Philips to their customers. The agreement between the parties involved the manufacture and supply of batteries by the Appellant to Philips, with specific provisions regarding prototypes, quality control, branding, and ownership transfer upon acceptance at Philips' godown. The dispute arose when the authorities sought to determine the assessable value based on the price at which Philips sold the goods to their customers.

Upon reviewing the facts and submissions, the Tribunal analyzed the agreement between the parties. It was noted that the definition of "manufacturer" under the Act did not apply in this context as the agreement was essentially for the sale of future goods between independent parties. If the Appellant was considered the manufacturer, the assessable value should be based on the wholesale cash price at the time of removal for delivery at the place of manufacture. The delivery terms in the agreement indicated that the goods were to be delivered at the factory gate, with transport costs borne by Philips, and ownership passing upon acceptance at their godown.

The Tribunal referred to previous decisions to support its analysis. It cited cases where the wholesale cash price received by the manufacturer from the first wholesale dealer was deemed the relevant price for excise valuation. The Tribunal emphasized that manufacturing goods to a buyer's specifications or brand name did not negate an arm's length sale. The presence of buyer-specific requirements, tests, trademarks, or shareholding did not automatically establish a related person status between the manufacturer and buyer.

Based on the interpretation of the agreement and relevant legal principles, the Tribunal allowed the appeal, directing the refund of any amounts paid or collected pursuant to the earlier adjudication order. The decision underscored the importance of determining assessable value based on the wholesale cash price at the place of removal, especially in cases involving manufacturing to buyer specifications or brand names.

This comprehensive analysis of the issues and legal principles involved in the judgment highlights the Tribunal's reasoning and decision-making process in resolving the dispute over the assessable value of the manufactured goods.