Assessable value for brand-manufactured excisable goods follows the manufacturer's clearance price, not the brand owner's resale price.

For excisable goods manufactured for a brand owner under a principal-to-principal arrangement, assessable value is determined by the manufacturer's factory-gate clearance price, not the brand owner's later resale price. The Tribunal applied the settled principle that excise duty attaches at manufacture and clearance, and that value added through the brand owner's goodwill cannot be included in the manufacturer's assessable value where the manufacturer does not own or sell under the brand. It also noted that no finding showed the declared valuation failed job-work valuation principles or was below material, labour and profit cost. On that basis, the duty demand, interest and penalty were held unsustainable.

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Issues: Whether the assessable value of excisable goods manufactured for a brand owner and cleared under a principal-to-principal arrangement was to be determined on the basis of the price charged by the manufacturer to the brand owner or on the basis of the brand owner's onward sale price to its customers, and whether the duty demand, interest and penalty could be sustained.

Analysis: The goods were manufactured by the appellant to the specifications of the brand owner and cleared at the agreed price. The Tribunal held that the valuation was governed by the price at which the manufacturer cleared the goods, not by the brand owner's later resale price. It relied on the settled principle that excise duty is attracted at the stage of manufacture and clearance, and that the enhancement in value attributable to the brand owner's goodwill cannot be added to the manufacturer's assessable value where the manufacturer does not own the brand or sell under its own brand. The Tribunal also noted that the record did not contain any finding that the assessable value adopted by the appellant failed to satisfy the job-work valuation principles or that it was below cost of materials, labour and profit. In view of the binding Supreme Court authorities applied by the Tribunal, the duty demand was unsustainable.

Conclusion: The valuation adopted by the appellant was upheld and the demand of duty, together with interest and penalty, was not sustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed.

Ratio Decidendi: For excisable goods manufactured for another person and cleared at the agreed factory-gate price, the assessable value is the manufacturer's clearance price and not the brand owner's subsequent sale price, and any duty, interest or penalty based on the latter is unsustainable absent a finding that the manufacturer's valuation was otherwise incorrect.

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