Wholesale price valuation prevents notional duty deductions where footwear exemption limits are exceeded and no duty is actually included.

Section 4 valuation takes the normal wholesale price at the time and place of removal as the assessable value, and deduction for duty is allowed only where the price actually includes duty payable on the goods. In the context of footwear exemption, a manufacturer cannot reduce a price above the exemption limit by subtracting a notional excise duty element when no duty was in fact included in that price. The SC noted that the Explanation to Section 4(4)(d)(ii) requires effect to be given to the exemption notification and does not permit deduction of duty that is not payable; the exemption claim on that basis was rejected and assessment proceeded on wholesale price.

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Issues: Whether the exemption for footwear valued up to the prescribed limit could be claimed by first deducting an assumed excise duty element from the wholesale price so as to bring the goods within the exemption threshold.

Analysis: The valuation scheme under Section 4 treats the normal wholesale price at the time and place of removal as the value of the goods, and deduction under Section 4(4)(d)(ii) is permissible only where the price actually includes duty payable on the goods. Where footwear was priced above the exemption limit but no excise duty was in fact included in that price because goods up to the limit were wholly exempt, the manufacturer could not artificially deduct a notional duty element. The Explanation to Section 4(4)(d)(ii) requires the effective duty alone to be considered and full effect to be given to the exemption notification; it does not permit deduction of duty that is not payable. The Court also held that the construction urged would defeat the object of the notification and permit profit to be masked as duty.

Conclusion: The claim for exemption on the basis of deducting a notional excise duty element was rejected, and the assessment had to proceed on the wholesale price as the value.

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