Transaction price governs excise valuation where related-person status and non-arm's-length pricing are not proved.

Assessable value of pattern tooling cleared to another concern had to be determined on the transaction price under Section 4(1)(a) because the record did not establish that the buyer was a related person in the statutory sense or that the price was not the sole consideration. In the absence of evidence of non-arm's-length dealing, the special valuation method under Rule 6(b)(ii) could not be invoked. The proper basis for valuation remained the price actually received from the buyer, and the demand founded on the sister-concern allegation failed.

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Issues: Whether the assessable value of the pattern tooling cleared by the assessee to another concern was to be determined under Section 4(1)(a) of the Central Excise Act on the transaction price, or whether recourse could be taken to Rule 6(b)(ii) of the Central Excise (Valuation) Rules on the premise that the buyer was a related person and the sale price was not the sole consideration.

Analysis: The demand was founded on the allegation that the assessee and the buyer were sister concerns, but the record did not disclose material to establish that they were related persons in the statutory sense. There was also no evidence showing that the transactions were not at arm's length or that the price charged was not the sole consideration. In the absence of such material, the price actually received from the buyer constituted the proper basis for valuation under Section 4(1)(a), and there was no justification for invoking the special valuation method under Rule 6(b)(ii).

Conclusion: The assessable value had to be determined on the basis of the transaction price under Section 4(1)(a), and recourse to Rule 6(b)(ii) was not permissible; the issue is decided in favour of the assessee.

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