Transaction value cannot be rejected merely because goods are sold to a holding company without Rule 9 conditions being met.

Rule 9 of the Central Excise Valuation Rules, 2000 applies only where excisable goods are not sold except to or through a related person. Where goods are sold predominantly to independent buyers and only a small portion is cleared to a holding company on negotiated principal-to-principal terms, transaction value cannot be rejected merely because of a holding-subsidiary relationship. On these facts, the statutory precondition for invoking Rule 9 was absent, so rejection of transaction value was unsustainable and the valuation demand and consequential penalties could not stand.

---

---

Issues: Whether Rule 9 of the Central Excise Valuation Rules, 2000 could be invoked to reject the transaction value and assess goods cleared to a holding company as sales to a related person.

Analysis: The goods were sold predominantly to independent buyers, with only a small portion cleared to the holding company on negotiated principal-to-principal terms. The valuation rule invoked in the notice contemplates a situation where excisable goods are not sold except to or through a related person. On the facts, the entire production was not sold to the holding company, and the prerequisite for application of Rule 9 was absent. The existence of a holding-subsidiary relationship, by itself, was held insufficient to displace transaction value in the absence of the requisite statutory conditions.

Conclusion: Rule 9 was not invokable, and the rejection of transaction value was unsustainable. The finding went in favour of the assessee.

Final Conclusion: The valuation demand and consequential penalties could not be sustained, and the appeal succeeded.

Ratio Decidendi: Rule 9 of the Central Excise Valuation Rules, 2000 applies only where excisable goods are not sold except to or through a related person, and a mere holding-subsidiary relationship does not by itself justify rejection of transaction value.

---