No 1685 1691 of 1979 Under Article 32 of the Constitution of India
Soli J Sorabjee and KC Dua for the Petitioners
V Parthasarthy Girish Chandra and CV Subba Rao for the Respondents
The Order of the Court was delivered by THAKKARJ The question raised in this Writ Petition under Article 32 of the Constitution of India as regards the determination of the market value of the goods manufactured by the petitioner company 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 between the parties provides for the buyers having the right to reject the 84 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 manufactured goods are tested ap proved and accepted by the buyers the manufacturers apply the label of the brand name of the buyers in this case Bajaj  on the manufactured goods
The petitioners contend that the market value of the goods manufactured by the petitioners should be assessed at the price at which the goods are agreed to be sold under the agreement between the manufacturers and the buyers
On the other hand the respond ent contents that the excise duty must be levied on the basis of the market value fetched by the sale of these goods by the buyers to their wholesalers
The goods manufactured by the Petitioner Company which are accepted by the buyers and to which the brand name label Bajaj  is applied are sold by the manufacturers to the buyers at the stipulated price and to none else
They are not at all sold in the open market by the manufacturers
The right to sell these goods with the brand name is solely and exclusively that of the buyers having regard to the fact that they alone are the owners of the brand name Bajaj 
The price fetched by the goods manufactured by the petitioner company is the price of the electrical goods sans  the brand name
And that should be the market value for the purposes of assessing the excise duty payable by the petitioner company which manufactures the excisable goods
The enhancement in the value of the goods by reasons of the application of the brand name is because of the augmentation attributable to the value of the goodwill of the brand name which does not belong to the manufacturers and which added market value does not accrue to the petitioner company or go into its coffers
It accrues to the buyers to whom the brand name belongs and to whom to fruits of the goodwill belong
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 cannot be assessed on the basis of the market value obtained by the buyers who also add to the value of the manufactured goods the value of their own property in the goodwill of the brand name  The Petitioners are therefore right and the respondents wrong
This point is covered by earlier deci sions of this Court namely 1 Union of India vs Cibatul Ltd  2 Joint Secretary to the Government of India vs Food specialities Ltd and 3 Civil Appeal No 1496 of 1977 disposed of by a Bench of three Judges of this Court by its judgment dated 3rd April 1986
The petition must therefore be al lowed
The respondents shall levy excise duty on the basis of the price charged by the manufacturers to the buyers namely Ms Bajaj Electricals Ltd A word of caution is however called for
Our decision must be understood correct ly not misunderstood conveniently
We there 85 fore clarify that our pronouncement will not enable a manufacturer who manufactures and sells his goods under his own brand name or under a brand name which he has acquired a right to use
In such a case the sale price fetched by sales effected by him under such brand name in wholesale will be the basis for computation of excise duty payable
by him So also nothing said herein will come to the rescue of a brand name owner who himself is the manufacturer of goods or to sales effected in favour of related  persons as defined by the Act
The Central Excises  Salt Act 1944
The Bank guarantee if any furnished by the petitioners in the context of the present Writ Petition will stand discharged
No Other point has been argued
The petition is allowed and the Rule is made absolute to the aforesaid extent
The Writ Petition is disposed of accordingly
There will be no order as to costs
Writ Petitions Nos
1686 1691 of 1979 raise the same point in the context of other brand names
These petitions will also stand disposed of in terms of this order with the same direction regarding computation of levy and discharge of guarantee bonds and with no order as to costs
MLA Petition al lowed


Summary:
The petitinner company in WP No 1685 of 1979 is manufacturing electrical goods for Ms 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 applies the label of the brand name of the buyers namely BajaJ  on the manufactured goods
The right to 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
Counsel for the petitioner in this writ petition con tended that the market value of the goods manufactured by the petitioner should be 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 hand it was argued by counsel in behalf of the respondent Union of India that the excise duty must be levied an 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
Allowing the writ petitions this Cart HELD 11
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 cannot he as sessed on the hams of the market value obtained by the buyers who also add to the value of the manufactured goods the value of their own property in the goodwill of the Brand name 
84F 12
Where a manufacturer who manufacture and sells his goods under his own brand name or under a bland name which he has acquired in use the sale price fetched by sales effected by him under 83 such bland name in wholesale will be the basis for computa tion of excise duty payable by him
So also nothing said herein will come to the rescue of a brand name owner who himself is the manufacturer of goods or to sales effected favour of related  persons as defined by the Central Ex cises and Salt Act 1944
85A B Union of India vs Cibatul Ltd  Joint Secretary to the Government of India vs Food Speciali ties Ltd and Ms RO Industries vs Union of India  Ors Civil Appeal No 1496 of 1977 decided on 3486 relied upon
In the instant case the price fetched by the goods manufactured by the petitioner company is the price Ofthe electrical goods sans the brand name
And that should be the market value for the purposes of assessing the excise duty payable by the petitioner company which manufactures the excisable goods
The enhancement in the value the goods by reason of the application of the brand name is because of the augmentation attributable to the value of the goodwill of the brand name which does not belong to the manufacturer and which added market value does not accrue to the peti tioner company or go into its coffers
It accrues to the buyers to whom the brand name belongs and to whom the fruits of the goodwill belong
89D E