Related-person valuation requires more than shareholding and exclusive supply; extra-commercial consideration and business control must be shown.

Mere 50% shareholding in the buyer and exclusive supply of the respondent's production were found insufficient, by themselves, to establish related-person status or mutuality of interest under central excise valuation rules. In the absence of evidence of extra-commercial consideration or a business nexus showing actual control affecting price, the declared assessable value could not be re-determined. The record also did not disclose suppression or other facts needed to justify the extended limitation period, so the longer period was unavailable. The demand therefore failed on both valuation and limitation grounds, and the order setting it aside remained undisturbed.

---

---

Issues: (i) Whether the respondent and its buyer were related persons with mutuality of interest so as to justify re-determination of assessable value under the central excise valuation provisions; (ii) Whether the extended period of limitation was invokable.

Issue (i): Whether the respondent and its buyer were related persons with mutuality of interest so as to justify re-determination of assessable value under the central excise valuation provisions.

Analysis: The valuation dispute turned on whether mere 50% shareholding of two partners in the buying company and exclusive sale of the respondent's entire production were sufficient to establish mutuality of interest and related-person status. The finding was that such facts by themselves did not prove the requisite extra-commercial consideration or the business nexus needed to disturb the declared value. The departmental reliance on a different factual matrix was found inapposite, while the appellate authority's appreciation of the evidence was accepted.

Conclusion: The respondent was not shown to be a related person on the facts proved, and the valuation demand failed on merits.

Issue (ii): Whether the extended period of limitation was invokable.

Analysis: The appellate authority's finding on limitation was based on the record and was not shown to be erroneous. In the absence of material demonstrating suppression or other ingredients necessary to justify the longer limitation period, no ground existed to disturb that finding.

Conclusion: The extended period of limitation was not invokable.

Final Conclusion: The revenue appeal failed in its challenge to both the valuation and limitation findings, and the order setting aside the demand was left undisturbed.

Ratio Decidendi: Mere shareholding nexus and exclusive supply are insufficient to establish related-person status or mutuality of interest unless supported by evidence of extra-commercial consideration and actual business control affecting valuation.

---