Excise valuation excludes post-manufacturing expenses and retailer's profit when assessable value is based on wholesale price.

Excise duty valuation is confined to the wholesale price of manufactured goods and does not extend to post-manufacturing expenses such as distribution and promotional costs or retailer's profit. Section 4(1)(a) proviso (ii) of the Central Excises and Salt Act, 1944 was construed consistently with the charging scheme, so that assessable value reflects the manufacturer's wholesale market price rather than retail pricing. On that interpretation, an assessment that included post-manufacturing expenses was unsustainable and was quashed, with the matter sent back for reconsideration after excluding those expenses.

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Issues: Whether post-manufacturing expenses, including distribution and promotional costs, could be included in the assessable value for excise duty under Section 4(1)(a) proviso (ii) of the Central Excises and Salt Act, 1944, and whether the impugned order assessing the goods on that basis was sustainable.

Analysis: Excise duty is a levy on manufacture, and the assessable value must ordinarily reflect the manufacturer's price in the wholesale market, not the retail price. The provision in question was construed as referring to a price fixed in the course of wholesale trade, and not to retail pricing that would bring in post-manufacturing expenses and retailer's profit. On that construction, the provision remained consistent with the charging section and the basic scheme of excise valuation. The impugned order, however, proceeded on the erroneous premise that post-manufacturing expenses could be added or treated as forming part of the assessable value without proper exclusion.

Conclusion: The provision was read as not authorising inclusion of post-manufacturing expenses in the assessable value, and the order assessing duty on that basis was quashed. The matter was directed to be reconsidered in accordance with law after excluding post-manufacturing expenses.

Ratio Decidendi: For excise valuation, the assessable value is confined to the wholesale price of the manufactured goods and cannot include post-manufacturing expenses or retailer's profit; a valuation provision will be upheld if construed consistently with that principle.

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