REPORTABL E

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL NOs. 8456-8463 OF 2002

Commissioner, Central Excise,  Chandigarh …Appellant

Versus

M/s. Kwality Ice Cream Co. …Respondent

JUDGMENT

B.SUDERSHAN REDDY,J:

1. The short question that arises for our consideration in  

these appeals  is whether M/s. Kwality Ice Cream Company  

on the one  hand and Brooke Bond Lipton India Limited –

(BBLIL) on the other  (which later merged with Hindustan  

Lever Limited -HLL) are treated to be related persons in the  

matter  of  computing  assessable  value  of  ice  cream  

manufactured by M/s. Kwality Ice Cream and as to whether  

duty should be demanded from M/s. Kwality Ice Cream  on  

1

the basis of the price at which BBLIL  sold the said product  

from its depot.

2. M/s.  Kwality  Ice  Cream  (respondent-assessee)  is  

engaged in the manufacture of ice cream falling under the  

Schedule  to the Central  Excise Tariff  Act,  1985 (for  short  

‘the Act’).  It entered into an agreement for the sale of the  

entire production to BBLIL, which later merged with HLL, for  

marketing.  It has entered into agreement with BBLIL for a  

period ending on March 21, 1997.  Later an agreement was  

entered into with M/s. HLL with effect from March 22, 1997.  

The terms and conditions of this agreement are the same as  

those with BBLIL.

3. The contention raised by M/s. Kwality Ice Cream that  

the entire transaction between the parties covered by the  

agreement was  on principal to principal basis and that the  

price was sole consideration for the sale of the goods was  

not accepted by the departmental authorities. The demand  

under   show  cause  notices  covering  the  period  from  

2

February, 1996 to November,  1997 was confirmed by the  

Assistant  Commissioner   under  Section  11  of  the  Central  

Excise  Act,  1944.   Appeals  preferred  by M/s.  Kwality  Ice  

Cream against the said order were rejected on the ground  

that  the  agreement  between M/s.  Kwality  Ice  Cream and  

BBLIL/HLL does not leave any scope but to indicate that M/s.  

Kwality Ice Cream has no autonomy to run its unit. Starting  

from  the  procurement/purchase  of  raw  material  to  the  

manufacture of final product, all the activities of M/s. Kwality  

Ice Cream were fully controlled by BBLIL/HLL.  The nature  

and type of machinery to be put in use was in terms of the  

directions  of  BBLIL/HLL.   M/s.  Kwality  Ice  Cream did  not  

have  any  liberty  to  market  its  goods.   The  appellate  

authority took the view that the transactions between the  

parties  were  not  on  principal  to  principal  basis.   Interest  

accrued  on  interest  free  deposit  with  M/s.  Kwality  Ice  

Cream,  read  with  other  terms  and  conditions  of  the  

agreement, reveal that it was clearly an extra commercial  

consideration.

3

4. M/s. Kwality Ice Cream preferred appeals challenging  

the order passed by the Commissioner before CEGAT, New  

Delhi,  inter-alia,  contending that  the price  of  the  product  

was not determined  exclusively at the instance of BBLIL but  

was determined in terms of the formula given in Appendix 4  

to the source agreement.  The formula was an integral part  

of the source agreement according to which the price was  

fixed.    There  was  even  a  provision  for  pricing  after  

upgrading of the existing factories/manufacturing facilities or  

at the new factories/manufacturing location of M/s. Kwality  

Ice Cream.

5. The CEGAT after elaborate consideration of the matter  

found that the provisions contained in clause (9) read with  

Appendix  4  and  5  of  the  agreement  between  the  parties  

clearly establish that the price was not being fixed by  BBLIL  

exclusively but on the other hand the price was fixed on the  

basis  of  the  formula  agreed  between  the  parties.   The  

Tribunal concluded that the transaction between the parties  

4

was  on principal to principal basis.  The Tribunal accordingly  

held that M/s. Kwality Ice Cream and M/s. BBLIL/HLL are not  

‘related persons’ and the transaction between them is one  

on principal  to  principal  basis  and the price  was the sole  

consideration for the sale of the goods and assessable value  

cannot be computed on the basis of the price at which BBLIL  

sold the products from its depot. It is that order which is  

under  challenge  in  these  appeals  preferred  under  Section  

35-L of the Central Excise and Salt Act, 1944.   

6. Learned  counsel  for  the  Department  strenuously  

contended before us that the Tribunal committed an error in  

coming to the conclusion in characterizing  the same as on  

principal  to  principal  basis,  and  not  as  between  related  

persons.  The submission was that the nature and extent of  

control  over  the  activities  of  M/s.  Kwality  Ice  Cream and  

huge  interest  free  deposits,  complete  control  over  price  

fixation mechanism unerringly   point to the fact that the  

M/s.  Kwality  Ice  Cream  and  HLL  were  ‘related  persons’.  

Learned counsel for the respondent  - assessee submitted  

5

that the findings recorded by the Tribunal do not warrant  

any interference by this Court as the same were based on  

proper appreciation of the material available on record.  It  

was submitted that the Tribunal merely applied the principle  

enunciated by this Court and came to the right conclusion  

that the parties are not to be treated as ‘related persons’ in  

the  matter  of  computing  assessable  value  of  ice  cream  

manufactured by M/s. Kwality Ice Cream.  It was submitted  

that even on the facts pleaded by the Department there is  

no evidence of any mutuality of interest  in the business of  

each other.  

7. We have carefully considered the submissions made by  

the learned counsel in these appeals.  

8. It becomes necessary to examine the ambit and scope  

of the term ‘related persons’ in order to gauge whether the  

relationship between  M/s. Kwality Ice Cream and HLL can  

be brought within its fold. A catena of cases have explored  

6

and  expounded  the  concept  of  ‘related  persons’  and  the  

intricacies involved in invoking its application. We shall refer  

to some of those relevant cases in order to decide the points  

urged by the learned counsel for the Department but before  

we do so it is necessary to have a glance at the relevant  

provisions  of  the  Act.  Section  4  of  the  Act  provides  as  

under:

“SECTION  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 pro  visions 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  

7

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;  

(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;  

(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  

8

not  sold  or  for  any  other  reason,  the  nearest  ascertainable  equivalent  thereof  determined  in  such manner as may be prescribed.   (2)………..

(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) …………..

(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.”  

9. According to clause (c) of sub-section (4) of Section 4  

of  the  Act,  ‘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  

9

holding company, a subsidiary company etc. The explanation  

to  Section  4  (4)  (c)  further  provides  that  in  this  clause  

‘holding company’, ‘subsidiary company’ and ‘ relative’  have  

the same meanings as in the Companies Act, 1956.  It is in  

this  background  that  the  validity  or  otherwise  of  the  

Tribunal’s order is required to be analyzed and judged.  

10. In  Union of India vs.  Bombay Tyre International  

Ltd.1, this Court examined the scheme of Section 4 (1) (a)  

before the Amendment Act, 1973 and also the position after  

the amendment. It was contended in that case before this  

Court that the definition of the expression “related person”  

was arbitrary and it included within its ambit a distributor of  

the assessee. This Court, however, held that in the definition  

of ‘related person’ being a relative and a distributor could be  

legitimately read down and its validity upheld. The definition  

of ‘related person’ should be so read, this Court emphasised,  

that the words “a relative and a distributor of the assessee”  

1         [1983 ELT 1896 SC]

10

should  be  understood  to  mean  a  distributor  who  was  a  

relative of the assessee. The Explanation to Section 4(4)(c)  

provides  that  the  expression  “relative”  has  the  same  

meaning as in the Companies Act, 1956. The definition of  

“related person”, as being “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  ...”,  shows  a  

sufficiently restricted basis for employing the legal fiction. It  

was reiterated that it is well settled that in a suitable case  

the Court could lift the corporate veil where the companies  

share the relationship of a holding company and a subsidiary  

company  and  also   pay  regard  to  the  economic  realities  

behind the legal facade. This aspect was further examined  

by this Court in Union of India Vs. ATIC Industries Ltd.2  

This  Court  referred  to  the  decision  of  Bombay  Tyre  

International Ltd. (supra) and also referred to the first part  

of the definition ‘related person’  in clause (c) of Section 4  

2       [ 1984 (17) ELT 323 SC = 1984 (3) SCR 930].   

11

(4) which defines ‘related person’.  This Court observed that  

if  the  transactions  between  the  manufacturer  and  his  

customers were on principal to principal basis and the whole  

sale price  charged by the assessee to the customers was  

the  sole  consideration  for  the  same  and   no  extra  

commercial  considerations entered in the determination of  

such a price, the customer cannot be held to be a ‘related  

person’  merely  because  he  holds  50%  share  in  the  

manufacturing company.  It is held:  

“It is not enough that the assessee has an  interest, direct or indirect, in the business of  the person alleged to be a related person nor  is it enough that the person alleged to be a  related  person  has  an  interest,  direct  or  indirect, in the business of the assessee. It is  essential  to  attract  the  applicability  of  the  first part of the definition that the assessee  and the person alleged to be a related person  must have interest, direct or indirect, in the  business of each other.  Each of them must  have  a  direct  or  indirect  interest  in  the  business  of  the  other.  The  equality  and  degree  of  interest  which  each  has  in  the  business of the other may be different; the  interest of one in the business of the other  may be direct, while the interest of the latter  in the business of the former may be indirect.  That would not make any difference, so long  

12

as  each  has  got  some  interest,  direct  or  indirect, in the business of the other”

11. In  Union of India vs.   Playworld Electronics Pvt.  

Ltd.3,   this Court took the view that merely because goods  

are  produced  with  customer  brand  name and  the   entire  

production sold to the owner of the brand name, cannot be  

treated as  a sale between ‘related persons’.  The case was  

that  Playworld  Electronics  Pvt.  Ltd.  manufactured  its  

products  in  the  brand  name  of  ‘Bush’  from  the  very  

beginning and was selling the same exclusively to M/s. Bush  

India Limited or its authorized dealers only. This Court took  

the view that the market value of the goods of Playworld  

Electronics Pvt. Ltd. was the price charged from M/s. Bush  

India Ltd. and not the market value at which price M/s. Bush  

India Ltd. sold to its wholesalers for the purpose of payment  

of excise duty.    

3       [ 1989 (41) ELT 368 SC]

13

12.  We shall now notice the judgment upon which reliance  

has been placed by the learned counsel for the appellant in  

Calcutta  Chromotype  Ltd.   vs.   Collector  of  Central  

Excise, Calcutta4 .  The said decision refers the decision of  

this court in Atic Industries Ltd. (supra) and does not take  

any different opinion.  The Court in the said decision also  

noticed the view expressed by this  Court   in  Collector  of  

Central Excise, Madras vs. T.I. Millers Ltd., Madras and T.I.  

Diamond Chain, Madras [ 1988 (35) E.L.T. 8 (SC)], Snow  

White Industrial Corporation vs. Collector of Central Excise  

[ 1989 (41) E.L.T. 360 (SC)]. After the analysis of all the  

said decisions this Court held:  

“If  we  examine  the  thrust  of  all  the  decisions,  there is no bar on the authorities to lift the veil of  a company, whether a manufacturer or a buyer, to  see  it  was  not  wearing  that  mask  of  not  being  treated as related person when, in fact, both, the  manufacturer and the buyer, are in fact the same  persons. Under sub-section (1) of Section 4 of the  Act,  value  of  the  excisable  goods  shall  not  be  deemed to be normal price thereof, i.e., 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  

4       [ 1998 (99) ELT 202 (SC]

14

removal, if the buyer is a related person and price  is not the sole consideration for sale. As to who is  a related person, we have to see its definition in  Section 4(4)(c) of the Act. It is not only that both  the  manufacturer  and  the  buyer  are  associated  with each other for which corporate veil may be  lifted to see who is behind it but also that they  should have interest, directly or indirectly, in the  business of each other. But once it is found that  persons behind the manufacturer  and the buyer  are  same,  it  is  apparent  that  the  buyer  is  associated  with  the  manufacturer,  i.e.,  the  assessee  and  then  regard  being  had  to  the  common course of natural events, human conduct  and  public  and  private  business  it  can  be  presumed  that  they  have  interest,  directly  or  indirectly,  in  the  business  of  each  other  (refer  Section 114 of the Evidence Act). It is, however,  difficult to lay down any broad principle to hold as  to when the corporate veil should be lifted or if on  doing that, it could be said that the assessee and  the buyer  are related persons.  That will  depend  upon  the  facts  and  circumstances  of  each  case  and it will have to be seen who is calling the shots  in both the assessee and the buyer. When it is the  same person the authorities can certainly fall back  on the third proviso to clause (a) of Section 4(1)  of the Act, to arrive at the value of the excisable  goods. It cannot be that when the same person  incorporates  two companies  of  which one is  the  manufacturer of excisable goods and the other is  the  buyer  of  those  goods,  the  two  companies  being  separate  legal  entities,  the  Excise  authorities  are  barred  from  probing  anything  further to find out who is the person behind these  two  companies.  It  is  difficult  to  accept  such  a  narrow interpretation. True that shareholdings in a  company can change but that is the very purpose  

15

to lift the veil to find out if the two companies are  associated  with  each  other.  Law is  specific  that  when duty of excise is chargeable on the goods  with reference to its value then the normal price  on which the goods are sold shall be deemed to be  the value provided (1) the buyer is not a related  person and (2) the price is the sole consideration.  It is a deeming provision and the two conditions  have  to  be  satisfied  for  the  case  to  fall  under  clause (a) of Section 4(1) keeping in view as to  who is the related person within the meaning of  clause (c) of Section 4(4) of the Act. Again if the  price  is  not  the  sole  consideration,  then  again  clause (a) of Section 4(1) will not be applicable to  arrive at the value of the excisable goods for the  purpose of levy of duty of excise.”

13. In Flash Laboratories Ltd.  vs.  Collector of Central  

Excise, New Delhi5 upon which strong reliance has been  

placed  by  the  learned  counsel  for  the  appellant,  in   our  

considered opinion, does not take any  different view other  

than  the  one  taken  by  this  Court  in  Bombay  Tyre  

International Ltd.  and ATIC Industries Ltd. (supra).  In that  

case  the  appellant-Company  was  a  manufacturer  of  

toothpaste (“Prudent”) falling under Sub-Heading 3306.00 of  

the Schedule to the Act.  It had been selling its products to  

5      [2003 (2) SCC 86]   

16

its holding Company, PP Ltd. as well as to PB Ltd. which was  

also a subsidiary  Company of  PP Ltd.   The appellant  had  

been paying  duty at the price at which the goods were sold  

to the holding Company. Having regard to the fact that both  

appellant as well as PB Ltd. were subsidiary Companies of PP  

Ltd., this Court took the view that though the relationship  

between  the  appellant  and  PB Ltd.   is  indirect,  they had  

mutual interest in the business of each other.  The facts and  

circumstances of the case reveal that there is a mutuality of  

interest   between  the three  Companies  as   60% of  the  

products  of  the  appellants  was  sold  to  PP  Ltd.   and  

remaining  40%  of  the  total  products  of  toothpaste  was  

being sold to PB Ltd. Moreover, it was found that PP Ltd. was  

incurring expenses for  sales promotion and advertisement  

for  the  sale  of  the  appellants’  products  namely  “Prudent  

Toothpaste”. It was under those circumstances it was held  

that the parties to the transactions were ‘related persons’.  

The said decision in no manner supports the point urged by  

the learned counsel for the appellants.  

17

14. In  CCE vs.   Xerographic Ltd.6,  this Court reiterated  

the  well settled principle and laid down the three conditions  

that are required to be satisfied before invoking the third  

proviso,  namely,  firstly,  there  should  be  mutuality  of  

interest; secondly, that the alleged ‘related person’ should  

be related to the assessee as per definition of Section 4 (4)  

(c) given in the Act and thirdly, and importantly, that the  

price charged from the ‘related persons’ was not the normal  

price but the price  lower than the normal price and because  

of  extra-commercial  considerations  the  price  charged  was  

less than the normal value.    

15. On analysis of the decisions referred to herein above, it  

appears  what  is  important  is  that  each  of  the  parties  

involved should have an interest, whether direct or indirect  

in the business of each other. The following are the relevant  

clauses of the agreement between M/s.  Kwality Ice Cream  

6       [(2006) 9 SCC 556]

18

and BBLIL/HLL based on which and applying the principles  

referred to herein above, a view is required to be taken as to  

whether they are ‘related persons’.  

“6 (i) – Kwality Ice Cream (K-North) agrees to  exclusively  source  and  produce  products  for  BBLIL. (i) (a) – The products will  be manufactured and  produced  by  K(North)  in  accordance  with  the  specifications, particulars of which  are set out in  Appendix  -2 of  the Agreement   which inter  alia  provides that reasons for change in raw material  will  be  intimated  by  the  party  to  BBLIL  and  approved  list  of  suppliers  of  material  will  be  intimated by BBLIL and K (North).”

16. It  is  based  on  these  clauses,  the  Departmental  

authorities took the view that the terms and conditions of  

the agreement between the respondent and BBLIL/HLL have  

mutuality  of  interest  and  therefore,  the  transactions  

between them are not on a principal to principal basis. The  

Tribunal  upon  meticulous  analysis  of  the  terms  and  

conditions of the agreement found that the price was being  

fixed  on  the  basis  of  the  formula  agreed  between  the  

parties. Reliance was placed on sub-clause (iii) of Clause 6  

which provides that pending commencement of production  

19

by  JVC,  M/s.  Kwality  Ice  Cream  shall  make  necessary  

investments  for  upgradation,  modification  or  alteration  in  

the existing factory/manufacturing facilities as per required  

by BBLIL subject to necessary approvals and pending such  

investments  M/s. Kwality Ice Cream shall not be responsible  

for any deficiency.  On  M/s. Kwality Ice Cream making such  

investment  for  upgradation  or  modification,  the  pricing  

agreed  upon  is  on  a  formula  which  has  taken  into  

consideration  the  investments  made by   M/s.  Kwality  Ice  

Cream  for  upgradation,  modification.  The  Tribunal  rightly  

arrived  at  the  conclusion  that  pricing  in  terms  of  clause  

(6)(iii)  would not lead to the conclusion that the transaction  

was not one between principal to principal.  

17. The Tribunal while interpreting clause (6) (ii) found that  

M/s. Kwality Ice Cream, as contended by the  Department,  

was not under the control of BBLIL/HLL as it was not under  

any obligation to shut down its unit or even move  to some  

other  location  against  its  will  as  contended  by  the  

20

Department.   The clause provides that an option was given  

to  M/s.  Kwality  Ice  Cream  to  accept  the  suggestion  of  

BBLIL/HLL  and   to  discontinue  or  close  down  its  

manufacturing  facilities  or  not  to  accept  the  same  since  

liberty  was given  to  M/s.  Kwality  Ice  Cream to   intimate  

BBLIL/HLL about its view in the matter.  There is nothing to  

show in that clause that BBLIL/HLL can compel M/s. Kwality  

Ice Cream to close down the factory or  move it  from its  

current location.  The only affect of M/s. Kwality Ice Cream  

not  accepting  the  suggestion  is  that  BBLIL/HLL  will  be  

relieved  of  its  obligations  under  the  sourcing  agreement.  

This clause merely indicates conditions on which the terms  

of sourcing agreement could be brought to an end.  

18. The  Tribunal  also  analyzed  clause  (6)  (i)  (c)  of  the  

sourcing agreement which inter alia provides that BBLIL/HLL  

would make interest free deposits of Rs. 2.75 crores to the  

units  of  M/s.  Kwality  Ice  Cream.   The  Tribunal  on  fair  

analysis of the clause in the sourcing agreement held that  

21

the deposits from BBLIL/HLL were taken by M/s. Kwality Ice  

Cream as a matter of commercial expediency and as a trade  

practice required in the circumstances of the case.  This was  

so because the amount due to M/s. Kwality Ice Cream as  

price of the Ice Cream manufactured for M/s. BBLIL is tied  

up for more than one month before payment is received by  

M/s.  Kwality  Ice  Cream  and  goods  were  exclusively  

manufactured according to the specifications of BBLIL and  

even packing material required carrying their brand name,  

there was any amount of  risk of goods being rejected by  

BBLIL  for  reasons  other  than  quality  and  this  was  the  

commercial expediency for making such deposits.

19. What is of importance is certain interdependence and  

reciprocity beyond the relationship of either a distributor or  

manufacturer so as to consider as to whether the parties are  

‘related persons’. On the facts it is noticed, essentially the  

relationship between M/s. Kwality Ice Cream and BBLIL/HLL  

is one sided and the facts do not suggest that each one of  

22

them have interest direct or indirect, in the business of each  

other.

20. In Supreme Washers Pvt. Ltd. vs. Commissioner of  

Central  Excise,  Pune7, the  Court  had  to  consider  and  

analyse the concept of mutual interest  and it was found that  

there was common procurement of raw material, parties had  

common  stock  accounting  and  planning  and  

interdependence  in  manufacturing  operations.  It  was  held  

that having common stock of raw material and semi finished  

goods, having common use of machinery between the three  

units,  having  common  marketing  arrangements  and  free  

flow  of  finance  between  the  three  units  cumulatively  

indicates interdependence of the three units with each other  

as  also  inter-relationship,  cumulatively  establishes  the  

appellants inter relationships and interdependence with each  

other.  No such interdependence is found in the instant case.

7          [(2003) 1 SCC 142]    

23

21. For  the  aforesaid  reasons,  we  are  of  the  considered  

opinion that the Tribunal did not commit any error in coming  

to the conclusion that M/s. Kwality Ice Cream and BBLIL are  

not ‘related persons’.  The transaction between them is of  

the nature of principal to principal   and the price was the  

sole  consideration  for  the  sale  of  goods.   Therefore,  the  

assessable value cannot be computed on the basis of the  

price at which BBLIL sold the product from its depot.

22. We,  accordingly,  find  no  merit  in  these  appeals  and  

they are accordingly dismissed.

----------------------------J. [B.SUDERSHAN REDDY]

      ----------------------------J.   [SURINDER SINGH NIJJAR]

New Delhi, November  26, 2010  

24