Related person allegations cannot exclude disclosed uniform discounts from assessable value without proof of mutuality of interest.

Disclosed trade and cash discounts uniformly available under stated quantity and payment conditions were not to be added to assessable value merely because buyers were alleged to be related persons. The Revenue failed to prove any extra-commercial relationship, mutuality of interest, or financial interest between the assessee and the buyers, and the mere common connection between persons was held insufficient. As prices charged to other customers were unchanged and no depression of price was shown, the discount policy remained part of the normal sale arrangement. Accordingly, the discounts were not includible in assessable value, and the duty demand, penalty, and interest did not survive.

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Issues: Whether the trade and cash discounts allowed on clearances could be added to the assessable value on the basis that the buyers were related persons and there was mutuality of interest, so as to sustain demand of duty, penalty, and interest.

Analysis: The price list disclosed the discount policy in advance, and the record showed that the discounts were uniformly available to buyers satisfying the stated quantity and payment conditions. No contrary evidence was produced to show denial of such discounts to other buyers in similar circumstances. The Revenue also failed to establish any extra-commercial relationship or financial interest between the assessee and the buyers so as to bring the case within the concept of related person under Section 4(4)(c) of the Central Excise Act, 1944. The mere fact that one person was connected with both concerns was held insufficient, particularly when the prices charged to other customers remained the same and no depression of price was shown.

Conclusion: The discounts were not liable to be added to the assessable value, and the duty demand, penalty, and interest did not survive.

Ratio Decidendi: In the absence of evidence of extra-commercial relationship or mutuality of interest, a disclosed and uniformly applied discount policy cannot be excluded from the assessable value merely because the buyer is alleged to be a related person.

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