Under-invoicing claims need reliable evidence; price differences alone cannot justify addition when processing costs and accepted valuation support the assessee.

A mere difference between the transfer price of goods moved from the Puducherry unit and the price charged by a third-party supplier did not, by itself, justify an addition for alleged under-invoicing. The Tribunal noted that the internal transfers involved semi-finished goods requiring further processing at the Guwahati unit, so the apparent price gap had to be assessed with the additional processing cost in mind. It also found that the difference between total internal transfer cost and third-party purchase cost was marginal, and that the declared valuation had been accepted for central excise purposes. On that basis, the addition for alleged undervaluation was deleted.

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Issues: Whether the addition made on the basis of alleged under-invoicing of goods transferred from the Puducherry unit to the Guwahati unit was justified.

Analysis: The dispute turned on whether the price charged by the assessee's own unit could be compared with the rate charged by a third-party supplier for the same product. The assessee explained that the goods transferred from its Puducherry unit were semi-finished and required further processing at the Guwahati unit, and that the additional processing cost substantially reduced any apparent price difference. The material on record also showed that the difference between the total cost of goods transferred internally and the total cost of goods purchased from the third party was only marginal. The Tribunal further noted that the assessee's valuation had been accepted for central excise purposes, which supported the declared valuation and weakened the basis for alleging suppression merely from a rate comparison.

Conclusion: The addition for alleged under-invoicing was not sustainable and was directed to be deleted.

Final Conclusion: The assessee succeeded on the sole disputed valuation issue, and the additions sustained by the lower authorities were set aside.

Ratio Decidendi: A mere difference in transfer price, without reliable evidence of suppression and without considering the functional differences and further processing costs, does not by itself justify an addition for under-valuation or under-invoicing, especially where the declared valuation has been accepted by the competent excise authority.

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