Central excise valuation of promotional packs turned on whether separately billed free soap was compulsory consideration.

Promotional packs of diapers required re-examination for central excise valuation because the treatment of the separately billed Pears soap was ative. If the soap sale was a compulsory condition of sale to wholesale buyers, valuation could not rest on Section 4(1)(a) and had to proceed under the valuation rules in Section 4(1)(b) using comparable goods. Even if the soap sale was not compulsory, its value would still need to be added as additional consideration under the valuation rules. The approved assessable value could not stand without first determining the true character of the soap transaction, so valuation had to be re-determined.

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Issues: Valuation of the promotional pack of diapers for central excise purposes, including whether the separate sale of the free soap formed part of the assessable value and whether valuation had to be re-determined under the valuation rules.

Analysis: The promotional pack was sold at a reduced declared price, while the Pears soap was also billed separately to the dealers. The decisive question was whether the sale of the soap was compulsory to the wholesale buyer. If the soap was a compulsory element of the transaction, the price under Section 4(1)(a) would not be available and valuation would have to proceed under Section 4(1)(b) by reference to the valuation rules and comparable goods. Even if the soap sale was not compulsory, its monetary value would still have to be treated as additional consideration under the valuation rules. On either view, the existing approval of value could not be sustained without first determining the true character of the soap sale.

Conclusion: The valuation had to be set aside and re-determined after examining the nature of the sale of the Pears soap.

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