Excise duty valuation for branded goods is based on factory-gate price, not the brand owner's higher resale price.

Excise duty on goods manufactured for brand owners is to be assessed on the price charged by the manufacturers to the brand owners at the factory gate, not on the higher resale price charged by the brand owners to wholesale dealers. The value added by the brand name and goodwill belongs to the brand owners and does not accrue to the manufacturers, so it cannot form part of the manufacturers' assessable value. Duty collected on the basis of the resale price is therefore refundable to the assessees.

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Issues: Whether excise duty on goods manufactured for brand owners was to be computed on the price charged by the manufacturers to the brand owners or on the higher price charged by the brand owners to their wholesale dealers.

Analysis: The price attributable to the added value of the brand name and its goodwill belonged to the brand owners and did not accrue to the manufacturers. Excise duty was therefore assessable on the market value fetched at the factory gate by the manufacturers, and not on the resale price realised by the brand owners from their dealers.

Conclusion: The duty had to be levied on the basis of the price charged by the manufacturers to the buyers under the sale agreement, and any duty collected on the higher resale basis was refundable to the assessees.

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