Declared sale price governs valuation when sales are at arm's length; remand for fresh verification was unsustainable.

Transactions found to be at arm's length and in the normal course of business required the declared sale price to be treated as the relevant normal price for valuation. On that basis, comparison with estimated cost of manufacture was not a proper valuation method, and section 4(1)(b) was inapplicable. The remand direction for fresh verification of prices of other sugar factories also travelled beyond the scope of the show cause notice and conflicted with the appellate finding already recorded. The remand was therefore unsustainable, and valuation based on the declared sale price was upheld in favour of the assessee.

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Issues: Whether the demand and the remand direction for fresh verification of valuation were sustainable when the sales were found to be in the normal course of business and the provisions relating to determination of value under section 4(1)(b) were held inapplicable.

Analysis: The finding that the transactions were at arms length and that the sales were effected in the normal course of business meant that the declared sale price constituted the relevant normal price. In such a situation, comparison of the sale price with estimated cost of manufacture was not a proper basis for valuation. The direction to verify prices of other sugar factories and to reintroduce section 4(1)(b) also travelled beyond the scope of the show cause notice and was internally inconsistent with the appellate finding already recorded.

Conclusion: The remand direction was unsustainable and the valuation based on the declared sale price was upheld in favour of the assessee.

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