Excise valuation: uniform wholesale margin excluded, but debit-note amounts remained dutyable as recoverable value.

A uniform 2% margin allowed to wholesale buyers and consignment agents for damage and replacement was not includible in assessable value because it formed part of the general marketing policy and was not tied to any state-wise price variation. Excise valuation continued to depend on the wholesale/normal sale price, not the retail price. However, where debit notes were actually issued for a quantified amount, that amount became legally recoverable and could be included for duty purposes. The demand was sustained only to the extent of the debit-note amounts, and the balance was set aside.

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Issues: Whether the 2% margin allowed to wholesale buyers/consignment agents towards damage and replacement was includible in the assessable value, and whether duty was payable on amounts covered by debit notes raised in respect of such margin.

Analysis: The margin was uniformly declared in the marketing policy and allowed to wholesale buyers throughout India. The variation in wholesale price across States was attributed only to differing Sales Tax and Octroi rates, not to any difference in the margin itself. On valuation, excise duty is chargeable on the wholesale/normal sale price under the valuation scheme, and the retail price cannot be substituted. However, where debit notes were actually issued for a quantified amount, that amount became legally recoverable and could not be ignored for valuation purposes.

Conclusion: The 2% margin was not generally includible in the assessable value, but duty was sustainable to the extent of the amount covered by debit notes. The demand was therefore upheld only for the debit-note amount and the balance was set aside.

Ratio Decidendi: For excise valuation, a uniform wholesale margin forming part of the normal trade structure is not includible in assessable value, but any specifically recoverable amount evidenced by debit notes can be brought to duty.

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