Valuation of goods sold to related units and independent buyers supports use of comparable market price for pre-deposit waiver.

Where excisable goods are sold both to related units and to independent wholesale buyers, the comparable price to independent buyers is the proper basis for valuation if it reflects the actual market price. The valuation rules relied on by the department were treated as applicable only where the entire production is sold to related persons, not where independent buyer sales provide a reliable benchmark. On that basis, the appellants established a prima facie case and obtained waiver of the pre-deposit requirement for duty and penalty, with the stay petition allowed.

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Issues: Whether the appellants had made out a prima facie case for waiver of pre-deposit of duty and penalty, and whether the valuation adopted by the department under the valuation rules was applicable when the goods were also sold to independent buyers.

Analysis: The appellants sold ingots not only to related units but also to independent wholesale buyers. The price at which the goods were sold to the related units was at par with or higher than the price charged to independent buyers. The valuation rules relied upon by the department were considered applicable only where the entire production is sold to related persons, and where a comparable price to independent buyers is available, that price was treated as the proper basis for valuation.

Outcome: A prima facie case was found in favour of the appellants, warranting waiver of the condition of pre-deposit of duty and penalty. The stay petition was allowed.

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