Kirpal, J. - (1.) The appellant who is manufacturing biscuits is seeking to impugn the assessable value of the biscuits manufactured by it for M/s. Britannia Industries Limited (hereinafter referred to as 'Britannia'), pursuant to an agreement which had been entered into between the two Companies.
(2.) It is not in dispute that the appellant was incorporated on 30-12-1982 and after making arrangements for obtaining finance it started a Unit from 3-1-1985 wherein it commenced commercial production of its own brand of biscuits.
(3.) On 15-12-1986, an agreement was entered into between the appellant and Britannia which required the appellant to manufacture biscuits for Britannia. The terms of the agreement, broadly speaking, envisaged that the ingredients for the manufacture of biscuits as well as the recipe or method by which the biscuits were to be manufactured were to be supplied by Britannia . The ingredients so supplied were also to be regarded as belonging to Britannia for the manufacture of the biscuits. The appellant was required to make packages as directed by Britannia and then supply the same under Britannia's instructions. For the work done, the appellant was entitled to receive certain amount which was to be fixed from time to time. The agreement also contemplated that if the biscuits were not manufactured up to the required standard, then the same were to be destroyed and in respect of those biscuits no payment was to be made to the appellant and, on the contrary, the appellant would become liable to pay for the cost of the ingredients which had got spoiled.;