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TMI Blog1987 (2) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the price at which they are sold by Philips to their customers. 2. The material facts in brief are - (a) the appellant entered into an agreement with Philips India for the manufacture and supply of dry cell batteries on 26-4-1972. The agreement provided, inter alia, for - (i) manufacture of prototypes of each distinctive type of goods agreed to be manufactured and sold to Philips and submission of such prototypes for their approval, (ii) right of Philips for inspection of the quality of components and raw materials, and institute quality control checks, (iii) branding of the goods sold to Philips with their name, (iv) liability of Philips for transport charges from Appellant s factory to the godown of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with the definition of that word in S.2(f) of the Act cannot arise in the context of the agreement between Philips India and the appellant which is nothing but an agreement to sell future goods between two independent parties. It is not as if Philips India had hired the labour and services of the appellant in the production or manufacture of excisable goods [Section 2(f) of the Act]. If that were so, consistent with such a finding, duty should have been demanded from Philips India, the manufacturer rather than the appellant; (b) on the contrary, if the appellant were, indeed, the manufacturer, (and therefore the assessee) then, the assessable value of the goods manufactured has to be the wholesale cash price for which an article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rand name; (e) thus, in 1977 E.L.T. 177 [A.K. Roy v. Voltas Ltd. - (1973) 2 SCR 1089], it was held that - So, even if there was no market in the physical sense of the term at or near the place of manufacture where the articles of a like kind and quality are or could be sold, that would not in any way affect the existence of market in the proper sense of the term provided the articles themselves could be sold wholesale to traders, even though the articles are sold to them on the basis of agreements which confer certain commercial advantages upon them. In other words, the sale to the wholesale dealers did not cease to be wholesale sales merely because the wholesale dealers had entered into agreement with the respondent under which certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agraph 25 of the report); (h) mere manufacture according to the buyer s specifications or under his supervision or to his brand name does not militate against an arm s lengh sale. Thus in 1985 (22) E.L.T. 302 (Union of India v. Cibatui Ltd.) and 1985 (22) E.L.T. 324 (Joint Secretary to Government of India v. Food Specialties Ltd. ) it was held that - (i) manufacture of goods to a specification constituting the buyer s standard, (ii) tests by the buyer and supply only on approval, (iii) affixture of the trade mark of the buyer to those supplied after approval, (iv) shareholding by the buyer in the manufacturing company, do not militate against an arm s length sale. The manufacturer owns the plant and machinery, the raw material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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