Related person test under Customs Valuation Rules requires proof beyond sole distributorship before rejecting declared transaction value.

A sole distributorship, by itself, does not make an importer a related person under Rule 2(2)(vi) and Explanation II of the Customs Valuation Rules, 1998. The statutory conditions for related-party treatment must be affirmatively established on the basis of material on record before the declared transaction value can be rejected. On the facts noted, no such material was shown, so rejection of transaction value on that ground was unjustified and the appellate order in favour of the importer was upheld.

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Issues: Whether the importer could be treated as a related person merely because it was the sole distributor, and whether the transaction value could be rejected on that basis under the Customs Valuation Rules, 1998.

Analysis: The original authority had invoked Rule 2(2)(vi) and Explanation II of the Customs Valuation Rules, 1998, but there was no material to show that the conditions for treating the importer and supplier as related persons were satisfied. Sole distributorship, by itself, was not enough to bring the case within the rule. The Commissioner (Appeals) was therefore justified in holding that the declared transaction value could not be rejected on that ground.

Conclusion: The importer was not liable to be treated as a related person merely because it was the sole distributor, and rejection of the transaction value on that basis was unjustified.

Final Conclusion: The appellate order in favour of the importer was upheld and the Revenue's challenge failed.

Ratio Decidendi: A party cannot be treated as a related person under Rule 2(2)(vi) of the Customs Valuation Rules, 1998 merely because it is a sole distributor; the statutory conditions must be affirmatively shown by material on record before the declared transaction value can be rejected.

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