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<h1>Court rules wholesale cash price for excise duty based on arm's length transactions</h1> The High Court of Judicature at Calcutta determined that the price charged by a manufacturer to its distributor constituted the wholesale cash price for ... Valuation -Distributorship agreement - Advertisement expenses Issues involved: Interpretation of wholesale cash price u/s 4(a) of Central Excises and Salt Act, 1944 for excise duty determination.Summary:The High Court of Judicature at Calcutta addressed the issue of whether the price charged by a company to its sole distributors represented the wholesale cash price for excise duty assessment. The court examined the transactions between the manufacturer and distributor to determine the correct wholesale cash price. The court noted the importance of arm's length transactions in ascertaining the wholesale cash price for excise duty purposes.In the case, it was established that the price charged by the manufacturer to the distributor was rightly considered the wholesale price for excise duty assessment. The court emphasized the need for transactions to be at arm's length to determine the wholesale cash price accurately.Referring to legal precedents, the court highlighted that the wholesale cash price should be based on transactions at arm's length without any extra-commercial considerations. The court also emphasized that the nature of the agreement between the manufacturer and distributor, whether principal to principal or agency-based, was crucial in determining the wholesale cash price.Examining the distributorship agreement between the parties, the court found that the relationship was that of buyer and seller on a principal to principal basis. The terms of the agreement supported the conclusion that the transactions were sales on a principal to principal basis, and not merely agency agreements.The court rejected the argument that certain provisions in the agreement affected the arm's length nature of the transactions, emphasizing that both parties had a mutual interest in maximizing sales. Ultimately, the court upheld the ruling in favor of the petitioners-respondents, concluding that the appeal lacked merit and was dismissed with costs.
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