Related-person valuation under excise law applies only to exclusive routed sales; independent buyer sales keep normal assessable value.

Rule 9 of the Central Excise Valuation Rules applies only where excisable goods are sold to or through a related person in the manner contemplated by section 4(4)(c) of the Central Excise Act, and the special valuation method is confined to cases of exclusive related-person clearances. Where the assessee also makes regular sales to independent buyers, the price charged to those independent buyers remains the relevant assessable value, and mere predominance of supplies to the related person does not justify Rule 9 valuation. On that basis, related-person valuation, together with the duty demand and penalties built on it, could not be sustained.

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Issues: Whether Rule 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 can be invoked only when clearances are made exclusively to or through a related person, and whether the existence of independent sales prevents adoption of the related-person valuation mechanism.

Analysis: Rule 9 applies where the assessee sells excisable goods to or through a related person in the manner contemplated by section 4(4)(c) of the Central Excise Act, 1944. The statutory language, read with the earlier decisions relied upon, shows that the special valuation method is meant for cases where the assessee's sales are exclusively to or through related persons and not where the assessee also makes regular sales to unrelated buyers. In such a situation, the price charged to independent buyers remains the relevant assessable value, and the mere predominance of supplies to the related person does not by itself justify invocation of Rule 9.

Conclusion: Rule 9 was not applicable on the facts because the assessees had also made sales to independent buyers. The duty demand and penalties based on related-person valuation could not be sustained.

Final Conclusion: The appeals succeeded and the impugned order was set aside.

Ratio Decidendi: The special valuation provision for sales to or through a related person applies only where the assessee's clearances are exclusively routed to or through related persons, and regular sales to independent buyers exclude its invocation.

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