Excise valuation cannot ignore invoice price merely because goods were sold between a subsidiary and its principal company.

For excise duty valuation under the unamended Section 4 of the Central Excises and Salt Act, 1944, the invoice price could not be rejected merely because the seller was a subsidiary and the buyer its principal company. Special relationship alone was insufficient to displace the declared wholesale cash price; the authorities needed evidence that the price was not at arm's length or that the buyer had in fact received favoured treatment. In the absence of such proof, the assessable value could not be revised on relationship alone, and the valuation orders were unsustainable.

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Issues: Whether, for assessment of excise duty under the unamended Section 4 of the Central Excises and Salt Act, 1944, the price at which a subsidiary sold goods to its principal company could be rejected merely because the parties had a special relationship, without proof that the price was not at arm's length or that favoured treatment had in fact been given.

Analysis: The authorities proceeded on the footing that the seller was a subsidiary of the buyer and that the relationship was special. That circumstance by itself was held insufficient to displace the declared price as the basis of valuation. To apply the rule governing wholesale cash price, there had to be evidence that the price charged was in fact low and that the buyer had received favoured treatment. In the absence of such evidence, the mere existence of a subsidiary-principal relationship could not justify rejection of the invoice price for excise valuation.

Conclusion: The assessable value could not be revised merely because the transactions were between a subsidiary and its principal company; the impugned valuation orders were unsustainable and were set aside.

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