Excise valuation must reflect factory-gate sales to independent wholesale dealers, not transactions with a related person.

For valuation under section 4(a) of the Central Excises and Salt Act, 1944, where arm's length wholesale sales to independent dealers are established, the assessable value is the wholesale cash price charged to those independent wholesale dealers at the factory gate. The fact that most sales were routed through a related person does not displace that benchmark, and the number or proportion of independent sales is not determinative once such genuine wholesale dealings exist. The assessable value therefore had to be fixed by reference to sales to independent wholesale dealers, not transactions with the related dealer.

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Issues: Whether, for assessment under section 4(a) of the Central Excises and Salt Act, 1944, the assessable value had to be based on the wholesale cash price charged to independent wholesale dealers where some sales were made through a related person.

Analysis: The petitioners manufactured fan belts and Vee belts and sold most of their production through a dealer found to be a related person, but the record also showed wholesale dealings at arm's length with independent wholesale dealers. Once such arm's length wholesale dealings were established, the number or proportion of such dealings was not ative of the wholesale cash price for valuation. The proper assessable value was therefore the price at which the products were sold to independent wholesale dealers at the time of removal from the factory gate.

Conclusion: The assessable value was required to be determined on the basis of sales to independent wholesale dealers, and not on the basis of the related dealer's transactions.

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