Comparable sales to independent buyers can support prima facie valuation and justify waiver of pre-deposit in mixed related-party sales.

For pre-deposit pending appeal, valuation of goods sold partly to independent buyers and partly to a related person may prima facie be supported by the price charged to independent buyers where those sales are comparable and the Department has raised no doubt about them. In the absence of a specific valuation rule for this mixed-sale situation, comparable independent sales were treated as a reasonable benchmark, especially where related-person sales formed only a very small portion of total turnover. The approach reflects the principle that sales at or about the same price to independent buyers indicate no price influence arising from the relationship. On that basis, a prima facie case was found and pre-deposit was waived during the appeal.

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Issues: Whether, for the purpose of pre-deposit pending appeal, valuation of goods sold partly to independent buyers and partly to a related person could prima facie be based on the price charged to independent buyers, making the demand of pre-deposit unnecessary.

Analysis: The basis of valuation was examined in the light of the Central Excise Valuation Rules and the Board's clarification noting that there was no specific rule covering a situation where goods are sold partly to independent buyers and partly to related persons. Sales to independent buyers at the same or comparable price were treated as a reasonable and prima facie acceptable benchmark, particularly where the Department had not raised any doubt about those sales. The order also relied on the principle that, where the related-person sales constitute only a very small portion of total sales, the Department should examine the larger body of transactions rather than isolate the related-person transactions. The reasoning further reflected the accepted principle that sales to independent buyers at or about the same price indicate absence of price influence from the relationship.

Conclusion: The appellants were held to have made out a prima facie case for valuation on the basis of comparable sales to independent buyers, and the requirement of pre-deposit was waived during pendency of the appeal.

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