law: Central Excise Act, 1944
  4. VALUATION OF EXCISABLE GOODS FOR PURPOSES OF
  
  CHARGING OF DUTY OF EXCISE. 
  
  (1) Where under this Act, the duty of excise is chargeable on
  
  any excisable goods with reference to value, such value, shall, subject to the
  
  other provisions of this section, be deemed to be –
  (a) the normal price
  
  thereof, that is to say, the price at which such goods are ordinarily sold by
  
  the assessee to a buyer in the course of wholesale
  
  trade for delivery at the time and place of removal, where the buyer is not a
  
  related person and the price is the sole consideration for the sale:
  Provided  that -
  ( i ) where, in accordance
  
  with the normal practice of the wholesale trade in such goods, such goods are
  
  sold by the assessee at different prices to different
  
  classes of buyers (not being related persons) each such price shall, subject to
  
  the existence of the other circumstances specified in clause (a), be deemed to
  
  be the normal price of such goods in relation to each such class of buyers;
  [ 26 ( ia ) where the
  
  price at which such goods are ordinarily sold by the assessee 
  
  is different for different places of removal, each such price shall, subject to
  
  the existence of other circumstances specified in clause (a), be deemed to be
  
  the normal price of such goods in relation to each such place of removal; 26 ]
  (ii) where such goods are sold by the  assessee in the course of wholesale trade for delivery at
  
  the time and place of removal at a price fixed under any law for the time being
  
  in force or at a price, being the maximum, fixed under any such law, then,
  
  notwithstanding anything contained in clause (iii) of this proviso, the price or
  
  the maximum price, as the case may be, so fixed, shall, in relation to the
  
  goods so sold, be deemed to be the normal price thereof;
  (iii) where the assessee 
  
  so arranges that the goods are generally not sold by him in the course of
  
  wholesale trade except to or through a related person, the normal price of the
  
  goods sold by the assessee to or through such related
  
  person shall be deemed to be the price at which they are ordinarily sold by the
  
  related person in the course of wholesale trade at the time of removal, to
  
  dealers (not being related persons) or where such goods are not sold to such
  
  dealers, to dealers (being related persons), who sell such goods in retail;
  (b) where the normal price of such
  
  goods is not ascertainable for the reason, that such goods are not sold or for
  
  any other reason, the nearest ascertainable equivalent thereof determined in
  
  such manner as may be prescribed. 27
  (2) Where, in relation to any excisable goods the price thereof
  
  for delivery at the place of removal is not known and the value thereof is
  
  determined with reference to the price for delivery at a place other than the
  
  place of removal, the cost of transportation from the place of removal to the
  
  place of delivery shall be excluded from such price.
  (3) The provisions of this section shall not apply in respect of
  
  any excisable goods for which a tariff value has been fixed under sub-section
  
  (2) of section 3.
  (4) For the purposes of this section, -
  (a) " assessee " means the person who is liable to pay
  
  the duty of excise under this Act and includes his agent;
  (b) " place of
  
  removal" means –
  ( i ) a factory or any other place or premises of production or
  
  manufacture of the excisable goods; [ 28 * * * 28 ]
  (ii) a warehouse or
  
  any other place or premises wherein the excisable goods have been permitted to
  
  be deposited without payment of duty;
  [ 29 (iii) a depot, premises of a consignment agent or any other
  
  place or premises from where the excisable goods are to be sold after their
  
  clearance from the factory and, 29 ] from where such goods are removed;
  [ 29 ( ba ) "time of removal",
  
  in respect of goods removed from the place of removal referred to in sub-clause
  
  (iii) of clause (b), shall be deemed to be the time at which such goods are
  
  cleared from the factory; 29 ]
  (c) "related person" means a person who is so
  
  associated with the assessee that they have interest,
  
  directly or indirectly, in the business of each other and includes a holding
  
  company, a subsidiary company, a relative and a distributor of the  assessee , and any sub-distributor of such distributor.
  Explanation :  In this clause "holding company",
  
  "subsidiary company" and "relative" have the same meanings
  
  as in the Companies Act, 1956 (1 of 1956);
  (d) " value ", in relation to
  
  any excisable goods, -
  ( i ) where the goods are delivered at the time of removal in a
  
  packed condition, includes the cost of such packing except the cost of the
  
  packing which is of a durable nature and is returnable by the buyer to the  assessee .
  Explanation :  In this sub-clause, "packing" means
  
  the wrapper, container, bobbin, pirn , spool, reel or
  
  warp beam or any other thing in which or on which the excisable goods are
  
  wrapped, contained or wound;
  (ii) does not include the amount of the duty of excise, sales
  
  tax and other taxes, if any, payable on such goods and, subject to such rules
  
  as may be made, the trade discount (such discount not being refundable on any
  
  account whatsoever) allowed in accordance with the normal practice of the
  
  wholesale trade at the time of removal in respect of such goods sold or contracted
  
  for sale.
  [ 30  Explanation : For the purposes of this
  
  sub-clause, the amount of the duty of excise payable on any excisable goods
  
  shall be the sum total of –
  (a) the effective duty of excise
  
  payable on such goods under this Act; and
  (b) the aggregate of the effective duties of excise payable
  
  under other Central Acts, if any, providing for the levy of duties of excise on
  
  such goods, and the effective duty of excise on such goods under each Act
  
  referred to in clause (a) or clause (b) shall be, -
  ( i ) in a case where
  
  a notification or order providing for any exemption (not being an exemption for
  
  giving credit with respect to, [ 31 or reduction of duty of excise under such
  
  Act on such goods equal to, any duty of excise under such Act, or the
  
  additional duty under section 3 of the Customs Tariff Act, 1975 (51 of 1975),
  
  already paid 31 ] on the raw material or component parts used in the production
  
  or manufacture of such goods) from the duty of excise under such Act is for the
  
  time being in force, the duty of excise computed with reference to the rate
  
  specified in such Act, in respect of such goods as reduced so as to give full
  
  and complete effect to such exemption; and
  (ii) in any other
  
  case, the duty of excise computed with reference to the rate specified in such
  
  Act in respect of such goods. 30 ]
  (e) " wholesale trade" means
  
  sales to dealers, industrial consumers, Government, local authorities and other
  
  buyers, who or which purchase their requirements otherwise than in retail. 25 ]  
  Comment  : "It is relevant to note that the
  
  packing, of which the cost is included, is the packing, in which the goods are
  
  wrapped, contained or wound when the goods are delivered at the time of
  
  removal. In other words, it is the packing in which it is ordinarily sold in
  
  the course of wholesale trade to the. wholesale buyer.
  
  The degree of packing in which the excisable article is contained will vary
  
  from one class of articles to another. From the particulars detailed before us
  
  by the assessees , it is apparent that the cost of
  
  primary packing, that is to say, the packing in which the article is contained
  
  and in which it is made marketable for the ordinary consumer, for example a
  
  tube of toothpaste or a bottle of tablets in a cardboard carton, or biscuits in
  
  a paper wrapper or in a tin container, must be regarded as falling within
  
  Section 4 (4) (d) ( i )"Union of India v.. Bombay Tyre International Ltd., AIR 1984
  
  SUPREME COURT 420