Related person under excise valuation law: zonal dealers with special relationship and sale-linked functions were treated as distributors.

Zonal wholesale dealers were treated as distributors of the manufacturer because they were appointed on a zonal basis and performed sale-related functions beyond ordinary buying and selling, including procuring orders, carrying out post-manufacturing sale activities and recovering sale proceeds. On those facts, a special relationship between the manufacturer and the dealers was accepted, bringing them within the expression "related person" under section 4(4)(c) of the Central Excises and Salt Act, 1944. The valuation objection therefore failed, and the revision application was rejected, with the order in appeal upheld.

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Issues: Whether the zonal wholesale dealers were distributors of the manufacturer and, on that basis, fell within the expression "related person" under section 4(4)(c) of the Central Excises and Salt Act, 1944.

Analysis: The dealers were found to be appointed on zonal basis and to perform functions beyond ordinary buying and selling, including procuring orders, undertaking post-manufacturing activity connected with sale, and recovering sale proceeds. On the facts available, they were treated as distributors of the assessee, and the existence of a special relationship between the manufacturer and the dealers was accepted. The plea that there was no supporting evidence for the contrary averments was also noted.

Conclusion: The dealers were held to be related persons within section 4(4)(c), and the revision application was rejected.

Final Conclusion: The order in appeal was upheld and the assessee's revision failed.

Ratio Decidendi: A distributor who, on the facts, has a special relationship with the manufacturer and performs sale-related functions beyond ordinary dealing can be treated as a related person for valuation purposes under section 4(4)(c) of the Central Excises and Salt Act, 1944.

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