Excise valuation of cosmetics must follow the manufacturer's transaction value, not the buyer's resale price, absent proven extra consideration.

Cosmetics excise valuation had to be based on the manufacturer's own transaction value under the valuation framework. Once the appellant was found not to be an agent or dummy of the buyer, the buyer's resale price was not relevant by itself. Any additional consideration flowing directly or indirectly from the buyer could be added only if specifically quantified under the valuation rule, but the record did not show that this exercise was done. The materials on advances, quality control, raw-material approval and rental adjustments did not establish that the price was unreal, and the transaction was treated as commercial and at arm's length. The Commissioner's valuation and the resulting demand were not sustained.

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Issues: Whether the assessable value of the cosmetics manufactured by the appellant could be fixed on the basis of the buyer's sale price, or on the footing that the transactions between the manufacturer and the buyer were tainted by extra-commercial considerations.

Analysis: The valuation had to be determined with reference to the manufacturer's own transaction value under the excise valuation framework. Once it was found that the appellant was neither an agent nor a dummy of the buyer, the buyer's resale price was not relevant by itself. If any additional consideration had flowed directly or indirectly from the buyer to the appellant, the proper course was to quantify that amount and add it to the appellant's sale price under the valuation rule. The record did not show that this exercise was undertaken, and the material on advances, quality control, raw-material approval, and rental adjustments did not establish that the price was not genuine. The transaction was held to be commercial and at arm's length.

Conclusion: The valuation adopted by the Commissioner could not be sustained, and the demand based on the buyer's price and alleged extra-commercial consideration was set aside.

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