TMI Blog1997 (2) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... hese were for sales to Customers against contracts. Appellants sold some of their goods solely to one customer called Palsons Drugs Chemical Industries, and certain other products were manufactured by the appellants solely to the second Customer SOL Pharmaceuticals against agreements entered into between the parties. On a scrutiny of the contracts entered into, the department took the view that the prices at which the goods were sold by the appellants to these two customers were not on principal to principal basis because prices were based on only the cost of production, and hence could not be considered as wholesale prices for the purposes of valuation of the goods for assessment under Section 4 of the Central Excises Salt Act, 1944. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he agreements with the two Customers entered into by the appellants. The agreement with the Customer Palsons is for marketing the products for which the appellants own the trade mark and patents. The goods are sold to Palsons on the basis of the transfer price mutually agreed upon, various clauses of the agreements were referred to for the contention that the transaction was on a principal to principal basis. 3. The ld. JDR Shri S.V. Singh urged that in both these agreements the goods are sold by the appellants on the cost price basis without addition to selling cost which is incurred by the Customer. The ld. JDR referred to the Tribunal decision in the case of Pawan Biscuit Company (P) Ltd. v. Collector of Central Excise - 1991 (53) E.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods exclusively at mutually agreed transfer price and Palsons will market the product at price fixed by themselves covering the marketing over-head and profits. In this context it is significant that such a fixation of price has been arranged despite the fact that the agreement says that the appellants will be the sole and authorised owner of the trade mark and brand name of the product. Although the appellants had explained before the Assistant Commissioner that actually there is consultation between them and their customers and the retail price is printed by mutual agreement, this appears to be at variance with commercial practice especially in respect of patent and proprietory medicaments. There is also nothing in the agreement to indic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any batch, the Seller shall make only such alterations or adjustments in its manufacturing and packaging process as the Buyer directs in writing. More importantly the Seller, that is the appellants, shall permit the Buyer, its authorised agents and representatives at all times to enter upon and inspect their factory premises and examine and supervise the process or method of manufacturing and packing of the said product and the raw materials, used or intended to be used by the appellants for or in relation to manufacture and packaging of the product, and the appellants are to comply with all directions given by the Buyer from time to time. Facilities are also to be given for the exclusive storage of all raw materials and other materials ..... X X X X Extracts X X X X X X X X Extracts X X X X
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