Factory-gate wholesale price governs excise valuation; intermediary resale price cannot replace it without proof of favoured pricing.

Excise valuation must be based on the normal wholesale cash price at the factory gate, because duty is levied on manufacture and section 4 requires assessment at the time and place of removal. The intermediary buyer's downstream resale price cannot replace the manufacturer's price unless there is evidence that the factory-gate price is specially low or that the buyer is a favoured customer in a non-arm's-length arrangement. On the facts, the goods were specialised components with a limited market and the intermediary was the natural wholesale outlet, so the factory-gate price remained the proper assessable value.

---

---

Issues: Whether excise duty on glass shells and glass tubes manufactured by the assessee had to be computed on the price charged at the factory gate to the intermediary wholesale buyer or on the intermediary's resale price to its customers.

Analysis: Excise is a duty on manufacture and, under section 4 of the Central Excises and Salt Act, the assessable value is the wholesale cash price at the time and place of removal from the factory. The relevant enquiry is whether the price charged by the manufacturer at the factory gate is the normal wholesale price. A related or connected buyer does not by itself justify substituting the buyer's resale price unless there is material showing that the manufacturer's price is specially low or that the buyer is a favoured customer. On the facts, the goods were specialised components with a very limited market, the intermediary functioned as the natural wholesale outlet, and there was no evidence that the factory-gate price was below the normal wholesale price.

Conclusion: The resale price of the intermediary could not be adopted for valuation, and the assessable value had to be determined on the basis of the factory-gate wholesale price charged by the assessee.

Ratio Decidendi: For excise valuation, the decisive criterion is the normal wholesale cash price at the factory gate, and the buyer's downstream resale price cannot be substituted unless the manufacturer's sale price is shown to be a favoured or artificially low price in an arrangement not at arm's length.

---