Related-person valuation requires proof of price influence; common directors alone do not justify rejection of transaction value.

Transaction value of goods sold to a buyer with common directors could not be rejected merely because the parties were interconnected undertakings. The decisive test remained whether the relationship influenced the price through mutuality of business interest or extra-commercial consideration. On the facts recorded, the entities had separate shareholding patterns, no holding-subsidiary relationship, and no evidence that the declared price was affected by the connection. Rule 8 of the Central Excise Valuation Rules, 2000 was therefore inapplicable, and valuation had to proceed on the transaction value. The Revenue's challenge failed.

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Issues: Whether the transaction value of goods cleared to a buyer with common directors could be rejected and valuation adopted under Rule 8 of the Central Excise Valuation Rules, 2000 on the footing that the parties were related persons.

Analysis: The dispute turned on whether the mere existence of common directors, or the fact that the entities were interconnected undertakings, was enough to discard the declared transaction value. The record showed separate shareholding patterns, no holding-subsidiary relationship, and no evidence of mutuality of business interest or any extra-commercial consideration influencing the price. The valuation provisions did not permit automatic rejection of transaction value merely because the buyer and seller were interconnected; the decisive question remained whether the relationship had affected the price. The principles relied upon in the earlier decision on related-person valuation were held applicable, as the basic test of mutuality of interest and price influence remained the same.

Conclusion: The transaction value could not be rejected on the facts proved, and valuation under Rule 8 was not warranted. The Revenue's challenge failed.

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