Assessable value excludes bottle hire and related charges absent proof of profit flow back, mutuality of interest, or undervaluation.

Bottle hire charges, security deposit and handling or transport charges were treated as outside assessable value where they were collected through invoices of a separate company and the department failed to show any flow back of profits to the manufacturer. Mere holding-subsidiary relationship was held insufficient to prove undervaluation without real mutuality of interest. The bottle hire arrangement was on a principal-to-principal basis, the bottles were durable and returnable containers, and the sale was on an ex-factory basis without transport being provided by the manufacturer. On these facts, the disputed amounts were not part of the normal price at the factory gate, and the demand and penalty were not sustainable.

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Issues: Whether the bottle hire charges, security deposit and handling or transport charges collected in the course of the transaction were includible in the assessable value of the excisable goods, and whether the penalty could be sustained.

Analysis: The charges were found to be collected on invoices of a separate company and there was no proof that the amounts reached the appellant or that profits of the related company flowed back to the appellant. Mere holding-subsidiary relationship was held insufficient to establish undervaluation in the absence of ative mutuality of interest. The agreement for hire of bottles and security deposit was on a principal to principal basis, the bottles were durable and returnable containers, and the sale was on an ex-factory basis without transport facility being provided by the appellant. On these findings, the amounts were held not to form part of the normal price at the factory gate.

Conclusion: The disputed charges were not includible in the assessable value and the demand and penalty were not sustainable.

Ratio Decidendi: Charges collected for durable returnable containers and related expenses are not includible in assessable value unless the department proves a real nexus with the manufacturer, including flow back of profits or mutuality of interest establishing undervaluation.

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