Related person valuation fails where common shareholding alone does not prove a taxable relationship or justify resale-price adoption.

Common shareholding alone does not make two limited companies related persons for excise valuation, because each company remains a separate legal entity. On that basis, the resale price charged by one company to unrelated buyers cannot automatically be adopted as the assessable value of goods cleared by the other company. The article further notes that where the appellant did not sell all goods through the alleged related party, the related-party resale price could not govern valuation without an established legal foundation for related person treatment. The demand based on related person valuation was therefore not sustainable.

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Issues: Whether the two limited companies were related persons for valuation purposes under Rule 6C(ii) of the Central Excise (Valuation) Rules, 1975, and whether the price at which the related party sold goods to unrelated buyers could be adopted as assessable value.

Analysis: The dispute turned on whether the show cause notice and the demand were based on a related party transaction and whether the Commissioner was correct in holding that the companies were not related persons. The reasoning accepted that common shareholding by itself does not establish a related person relationship between two limited companies, since each company is a separate legal entity. It was also noted that the appellant did not sell all goods through the alleged related party, so the resale price charged by that party to unrelated buyers could not automatically become the assessable value for the goods cleared by the appellant.

Conclusion: The two companies were not related persons, and the revenue could not succeed on the basis of the related party resale price.

Final Conclusion: The demand based on related person valuation was not sustainable, and the revenue's challenge failed.

Ratio Decidendi: Common shareholding alone does not make two limited companies related persons, and resale prices charged by one entity to unrelated buyers cannot be adopted as assessable value unless the legal basis for related person valuation is established.

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