Excise valuation of free-gift toothpaste follows market-sale value where goods are identical in quality and contents.

Toothpaste cleared as free gifts to school children and dentists was held to be assessable on the same basis as toothpaste sold in the market because the gifted goods were identical in quality and contents to the sold goods. The additional carton printing identifying the promotional distribution did not change the character of the product, and the post-clearance manner of disposal was irrelevant for valuation. The expression "such goods" was construed to cover the same class of dental cream manufactured by the assessee, whether intended for sale or free distribution, so valuation had to be made by reference to the price of goods ordinarily sold by the assessee.

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Issues: Whether toothpaste cleared for free distribution as gifts to school children and dentists was to be assessed for excise duty on the same basis as toothpaste sold in the market under section 4 of the Central Excises and Salt Act, 1944.

Analysis: The goods distributed as gifts were found to be identical in quality and contents to the goods sold in the market, the only difference being additional printing on the cartons indicating free distribution and the promotional programme. The manner of disposal after clearance was held to be irrelevant for valuation, and the expression "such goods" was construed to cover the same class of dental cream manufactured and sold by the assessee, whether intended for sale or free distribution. Assessment was therefore required to be made with reference to the value of the goods ordinarily sold by the assessee.

Conclusion: The free-gift toothpaste was rightly assessed at the same value as the sold toothpaste, and the challenge to the valuation failed.

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