SIDHOSONS & ANR. ETC. ETC. versus UNION OF INDIA & ORS. ETC. ETC.

Citation: [1987] 1 S.C.R. 82 · Decided: 28-10-1986 · Supreme Court of India · Bench: M.P. THAKKAR · Disposal: Case Allowed

Judgment (excerpt)

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SIDHOSONS & ANR. ETC. ETC. 
v. 
UNION OF INDIA & ORS. ETC. ETC. 
OCTOBER 28, 1986 
[M.P. THAKKAR AND B.C. RAY, JJ.] 
Central Excise and Salt Act, 1944, s.2(f)-Market valu.,_..What 
is-For payment of excise duty-Brand name-Value of-When inclu-
dible. 
· 
The petitioner-company in W .P. No. 1685 of 1979 is manufactur- _ 1 
C ing electrical goods for M/s. Bajaj Electricals Limited, the buyers. As ""\.... .,_
per agreement the goods are not at all sold in the open market by the 
petitioner-company. After the manufactured goods are accepted by the 
buyers, the petitioner-company app6es the label of the brand name of 
" 
the buyers, namely, •Bajaj' on the manufactured goods. The right to 
D sell these goods with the aforesaid brand name is solely and exclusively 
that of the buyers having regard to the fact that they alone are owners 
of the brand name. 
Couruiel for the petitioner in this writ petition contended that the 
market value of the goods manufactured by the petitioner should be 
E assessed at the price at which the goods are agreed to be sold under the 
agreement between the manufacturer and the buyers. On the other 
band, it was argued by counsel on behalf of the respondent-Union of 
India that the excise duty must be levied on the basis of market value 
fetched by the sale of these goods by the buyers to their wholesalers. 
Similar question of law arose in the other writ petitions. 
F 
Allowing the writ petitions, this Court, 
HELD: 1.1. Excise duty is payable on the market value fetched 
by the goods, in the wholesale market at the factory gate manufactured 
by the manufacturers. It ~ 
he assessed on the basis of the market 
G value obtained by the buyers who also add to the value or the manu-
factured goods the value of their own property in the goodwill of the 
'Brand name'. [84F] 
1.2. Where a manufacturer who manufactures and sells his goods 
under his own brand name or under a brand name which he has . 
H acqnired in use, the sale price fetched by sales effected by him under 
82 
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SI.DHOSONS v. UNION OF INDIA TfHAKKAR, !.] 
83 
such brand Daine in wbolesale, will be the basis for computation of A 
excise duty payable by ·iilm. So also nothing said herein will come to the 
rescue of a braud name owner who himself is the manufacturer of goods 
or to sales effected. in favour of 'related' persons as defined· by the 
Central Excises and Salt Act, 1944. [8SA-B) 
Union of India v. Cibatul Ltd., (1985) 22 E.L.T 30~, Joint Secret-
ary to the Government of India v. Food Specialities Ltd., (1985) 22 
E.L.T 324 and M/s. R.O. Industries v. Union of India & Ors., Civi! 
Appeal No. 1496 of tm decided on 3.4.86, relied upou. 
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-.. _}---
In the instant case, the price fetched by the goods manufactured 
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by the petitioner-company is the price of'the electrical goods sans the c 
braud name. And that should be the market value for the purposes of 
assessing the excise duty payable by the petitioner-company which 
m811UfactUres the excisable goods. The enbancemeut in the value· of the 
goods by reasou of the appHcation of the brand name is because of the 
augmentation attributable to the value of the goodwill of the brand 
uame which does not belong to the manufacturer and which added 
market value does not accrue to the petitioner-company or go into its · 
coffers. It acerues to the buyers to whom the brand name belongs and to ' 
whom the fruits oftbe goodwill belong. (890-E) 
ORIGINAL JURISDICTION: Writ Petition No. 1685-1691 of 
D 
1979 
E 
Und.er Article 32 ·of the Constitution of India. 
Soli J. Sorabjee and·K.C. Dua for the Petitioners. 
V. Parthasarthy, Girish Chandra and C. V. Subba Rao for the 
Respondents. 
The Order of the Court was delivered by 
F 
THAKKAR,•J. The question raised in this Writ Petition under 
Article 32 of the Constitution of India as regards the determination of G 
the market value of the goods manufactured by the petitioner com-
pany for the purposes of computation of the excise duty leviable on the 
same. The petitioners (manufacturers) are manufacturing electrical 
goods under a contract with another company known as the Bajaj 
Electricals Ltd. (here-after referred to as buyers). The agreement bet-
ween the parties provides for the buyers having the right to reject the 
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84 
SUPREME COURT REPORTS 
[ 1987) l S.C.R. 
A 
goods if the goods are not in accordance with the buyers' specifications 
or do not come up to the stipulated standard of quality. After the 
ma

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