Excise valuation must respect amended contracts and add only proven additional consideration, including power-related benefits.

Amended contractual terms governing gas price could not be ignored for excise valuation unless shown to be a sham or not at arm's length. Where the parties validly substituted the original project-cost formula with revised amendments, the assessable value had to be examined on the basis of the operative contract, with only any additional consideration flowing directly or indirectly from the buyer capable of inclusion. The record also required fresh examination of whether notional power cost, power-related benefits, and minimum take or pay receipts formed part of assessable value. Limitation and penalty were likewise left open for reconsideration in de novo proceedings.

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Issues: (i) Whether the assessable value could be recomputed by ignoring the amended pipeline supply agreement and treating the original project-cost formula as continuing to govern the price of gas supplies; (ii) whether notional power cost could be adopted and whether any additional consideration arising from power-related transactions and minimum take or pay charges was includible in assessable value.

Issue (i): Whether the assessable value could be recomputed by ignoring the amended pipeline supply agreement and treating the original project-cost formula as continuing to govern the price of gas supplies.

Analysis: The contractual price was linked to project cost under the original agreement, but the parties later executed amendments, including a second amendment, fixing a revised project cost for gas price calculation. Under contract law, parties are free to substitute or alter the original bargain, and a valid substituted contract discharges the earlier one. The valuation authority could not ignore the amended terms and recompute price solely on the basis of the original formula unless the amendments were shown to be a facade or not at arm's length. The proper enquiry was whether any additional consideration flowed from the buyer apart from the contractual price, and if so, only that element could be added proportionately.

Conclusion: The original project-cost formula could not be applied mechanically in disregard of the amended contract, and the issue required fresh adjudication on the basis of the operative contract.

Issue (ii): Whether notional power cost could be adopted and whether any additional consideration arising from power-related transactions and minimum take or pay charges was includible in assessable value.

Analysis: The record did not establish on the present material that the notional tariff adopted by the adjudicating authority was the only correct basis, especially when the appellants claimed actual power costs and produced objections to the KEB rate. On valuation, the relevant enquiry was whether money value of any additional consideration flowed directly or indirectly from the buyer to the assessee. If power-related benefits or minimum take or pay receipts constituted such additional consideration, they were capable of inclusion under the valuation rules, but the factual basis had to be examined afresh. Limitation and penalty were also left to be reconsidered in the de novo proceedings.

Conclusion: The power-cost and minimum take or pay issues were not finally determined and were remitted for reconsideration on the relevant evidence.

Final Conclusion: The appeals succeeded only to the extent that the matter was sent back for fresh adjudication on valuation, including the effect of contractual amendments, power cost, additional consideration, limitation, and penalty.

Ratio Decidendi: For excise valuation, an amended and operative contract cannot be ignored unless shown to be a sham, and only the money value of additional consideration flowing from the buyer, direct or indirect, may be added to the contractual price.

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