JOINT SECRETARY TO THE GOVT, OF INDIA AND OTHERS versus FOOD SPECIALITIES LTD.

Citation: [1985] SUPP. 3 S.C.R. 165 · Decided: 30-09-1985 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Dismissed
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Judgment (excerpt)

165 
JOINT SECRETARY TO THE GOVT, OF INDIA AND OTHERS 
v. 
FOOD SPECIALITIES LTD. 
SEPIJ;;i18ER 30, 1985 
[P.N. llHAG'WATI, C.J., R.S. PATHAK AND AMARENDRA NATH SEN, JJ.] 
Central Excise & Salt Act, 1944 - Goods manufactured for and 
on behalf of buyer with buyer's trade mark - Goods sold to buyer 
at wholesale price - Determination of the value of goods for the 
purpose of levy of excise duty - Trade marks - Whether value of 
trade marks 
can be added to ' the wholesale price for such 
A 
B 
detennination. 
C 
The respondent used to manufacture certain goods for sale 
in India by Messers Nestle's Products India Limited (for short 
Nestle's) under certain trade marks in respect of which the 
latter was registered as the ·sole registered user in India. The 
goods were supplied to Nestle's at wholesale price on rail at 
D 
Moga or free on lorry at factory. The respondent disputed the 
value of the goods determined by the excise authorities for the 
purpose of the levy under the Central Excises and Salt Act, 1944 
and ultimately the respondent filed writ petitions in the High 
Court. The High Court allowed the writ petitions holding that the 
value of the trade marks cannot form a component of the value of 
E 
the goods for the purpose of aasesSDlellt of excise duty. 
In appeal to the Supreme Court, the appellant contended 
that the value of the goods sold by the respondent to Nestle's 
should, for the purpose of 
levy of excise duty, include the 
value of the trade marks under which the goods are sold in the 
market and that the value of such trade marks should be added to 
F 
the wholesale price for which the goods are sold by 
the 
respondent to Nestle's. 
Dismissing the appeal. 
HELD: The value of Nestle's trade marks cannot be added to 
G 
the wholesale price charged by the resporident to Nestle's for the 
purpose of computing the value of the goods manufactured by the 
respondent in the assessment to excise duty. [168 C-D) 
In the instant case, what are sold and supplied by the 
respondent are goods manufactured by it with the trade marks 
H 
166 
SUPREME COURT REPORTS 
[1985] SUPP.3 s.c.R. 
A 
affixed to them and it is the whole sale price of goods that must 
determine the value for the purpose of assessment of excise duty. 
It is imnaterial that the trade marks belong to Nestle's. What is 
material is that Nestle's have authorised the respondent to affix 
the trade marks on the goods manufactured by it and it is the 
goods with the trade marks affixed to them that are so sold by 
B 
the respondent to Nestle's. There can therefore be no doubt that 
the wholesale price at which the goods with the trade marks 
affixed to them are sold by the respondent to Nestle's as 
stipulated under tiie agreements would be the value of the goods 
for the purpose of excise duty. That is the price at which the 
respondent sells the goods to Nestle's in the course of wholesale 
trade. 
[167 H; 168 A-BJ 
c 
D 
E 
CIVIL APPELLATE JURISDICTION 
Civil Appeal Nos. 
1723-1736 
of 1981 
From the Judgment and Order dated 31.8.1976 of the Punjab 
and Haryana High Court in Writ Nos. 1969, 4420, 4422 to 4424, 
4429 to 4436, 4497 of 1975. 
K. Parasaran, Attorney General of India , R.N. Poddar and 
Miss A. Subhashini for the Appellants. 
N.A. Palkhivala, Soli J. Sorabjee, Ravinder Narain, T.M. 
Ansari and Miss Rainu Walia for the Respondent. 
The Judgment of the Court was delivered by 
PATHAK, J. This appeal by special leave is directed against 
the judgment and order dated August 31, 1976 of the High Court of 
Punjab and Haryana allowing a group of writ petitions filed by 
F 
the respondent against the levy of excise duty. 
The 
respondent, Messrs. 
Food Specialities Limited, Moga 
is a company registered under the Indian Companies Act, 1956. It 
entered into a number 
of agreements with Messrs. 
Nestle's 
Products (India) Limited, a subsidiary of a foreign company, 
G 
Messrs. Nestle's Holdings Limited, to manufacture for and on 
behalf of Messrs. Nestle's Products (India) Limited (hereinafter 
referred to as "Nestle's") sweetened condensed milk, soluble 
coffee, baby milk food, milk powders and infant cereal foods for 
sale in India by Nestle's under certain trade-marks in respect of 
which the latter was registered as the sole registered user in 
H 
India. 
The 
agreement s ti pula ted that the respooden t 
would 
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JT. ~ECY. GOVT. OF INDIA v. FOOD SPECIALITIES [PATHAK, J.] 
167 
manufacture the goods and supply them to Nestle's in such 
A
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