Excise valuation excludes free bindis packed with contract-manufactured soaps where they have no nexus to manufacture or sale price.

In excise valuation, the value of free bindis supplied under a separate arrangement and merely packed with contract-manufactured soaps was not includible in the assessable value of the soaps. The soaps were manufactured under a fixed-price contract, and the bindis had no nexus with the manufacturing cost or the sale price of the excisable goods. On those facts, the addition of the bindis' value to the soap price was unjustified, so the assessee succeeded on the valuation issue.

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Issues: Whether the value of bindis packed along with contract-manufactured soaps was liable to be included in the assessable value of the soaps for excise duty purposes.

Analysis: The soaps were manufactured under a separate contract, while the bindis were supplied free under a different arrangement and merely packed with the soaps as directed by the buyer. The price of the soaps remained fixed under the manufacturing contract, and the bindis had no connection with the manufacturing cost or the assessable value of the soaps. On these facts, the value of the free bindis could not be treated as part of the price of the excisable goods.

Conclusion: The addition of the value of the bindis to the price of the soaps was not justified, and the assessee succeeded on the valuation issue.

Ratio Decidendi: In excise valuation, the value of a free article supplied under a separate arrangement and merely packed with the manufactured goods cannot be included in the assessable value where it has no nexus with the manufacture or sale price of those goods.

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