Contract price as assessable value prevails in central excise absent relatedness, extra consideration, or price manipulation.

Where goods are sold under a written principal-to-principal contract and the price is departmentally accepted, that contract price remains the normal assessable value for central excise purposes. In the absence of proof that the buyer was a related person, that any extra consideration flowed back to the manufacturer, or that the price was manipulated, a higher notional value based on earlier offers for small quantities cannot displace the genuine wholesale price. The duty demand founded on the notional valuation was therefore not sustainable, and the assessee's appeal succeeded.

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Issues: Whether the contract price at which Triclosan was sold to the buyer could be adopted as the normal price under the valuation provisions of central excise law, and whether the demand based on a higher notional price was sustainable.

Analysis: The goods were sold under a written contract on a principal-to-principal basis at Rs. 1,200 per kg. The price was approved by the Department and there was no finding that the buyer was a related person or that any additional consideration flowed back to the manufacturer. The higher price relied upon by the Revenue was based on offers for small quantities made before the relevant period and could not, by itself, establish the ordinary wholesale price. The record also did not show any manipulation of price through the downstream use of the input or any basis for discarding the contract price in favour of a notional value under the valuation rules.

Conclusion: The contract price of Rs. 1,200 per kg. was the correct normal price, and the duty demand founded on Rs. 2,242 per kg. was not sustainable; the appeal was allowed in favour of the assessee.

Final Conclusion: The order of confirmation of duty and penalties could not be sustained because the assessable value had to be determined on the basis of the genuine contract price accepted in ordinary wholesale trade.

Ratio Decidendi: Where a sale is on principal-to-principal terms and there is no proof of relatedness, extra consideration, or other circumstances displacing the contract price, that contract price constitutes the normal assessable value for central excise purposes.

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