Concessional valuation and bonus pieces: price influence must be shown, and promotional free goods can still attract excise duty.

A concessional valuation notification must be applied on its own wording, and disqualification under clause (iv) arises only if the relevant relationship actually influences the invoice price. Stockist appointment letters and related commercial terms were found to be enforceable agreements to sell, but not agency or completed-sale arrangements; the stipulated stocks, discounts, deposits and overriding commission did not by themselves prove the required price influence, so the concession was not denied on that ground. Bonus pieces cleared as part of a sales promotion or quantity-discount structure were treated as commercially embedded in the charged goods, so they were not exempt from excise duty on the revenue's theory.

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Issues: (i) Whether the stockist appointment letters and accompanying commercial arrangements created a relationship falling within clause (iv) of Notification No. 120/75-C.E., and whether the invoice price was influenced by such relationship; (ii) Whether bonus pieces cleared without separate duty were liable to excise duty as assessable goods.

Issue (i): Whether the stockist appointment letters and accompanying commercial arrangements created a relationship falling within clause (iv) of Notification No. 120/75-C.E., and whether the invoice price was influenced by such relationship.

Analysis: The Notification was construed on its own language and not by importing the full concepts of valuation under section 4. The stockist letters were accepted as enforceable arrangements, but on their terms they amounted only to agreements to sell and not contracts of agency or completed sales. The relationship arising from such agreements was commercial in character, yet the record did not show that the invoice price itself was actually influenced by that relationship. The mere existence of stipulations as to stocks, discounts, price maintenance, deposits, and overriding commission was insufficient to establish the disqualifying influence required by the Notification.

Conclusion: The condition in clause (iv) of Notification No. 120/75-C.E. was not attracted so as to deny the assessee the benefit on this ground.

Issue (ii): Whether bonus pieces cleared without separate duty were liable to excise duty as assessable goods.

Analysis: The bonus pieces were treated as part of the commercial pricing structure rather than as truly free articles. The value of such pieces was effectively spread over the charged goods and the arrangement operated as a sales promotion device or quantity discount. On that footing, the levy could not be avoided merely because the bonus pieces were separately described as free in commercial terms.

Conclusion: The bonus pieces were not exempt from duty on the footing advanced by the revenue, and the assessee succeeded on this issue as well.

Final Conclusion: The assessment made by the lower authorities could not be sustained, and the appeal succeeded with consequential relief to the assessee.

Ratio Decidendi: A notification granting concessional valuation must be applied according to its own wording, and disqualification under a clause requiring an influencing relationship is not established unless the invoice price is shown to have been actually affected by that relationship.

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