Assessable value for inter-connected undertakings follows the assessee's sale price unless statutory related-person criteria trigger Rule 9.

Valuation of goods cleared to an inter-connected undertaking turns on the statutory distinction between related persons under section 4(3)(b) and other inter-connected undertaking cases under Rules 9 and 10. Rule 9 applies only where the relationship falls within the specified statutory categories, while Rule 10(b) requires valuation on the footing that the parties are not related persons in all other inter-connected undertaking cases. On that basis, the buyer's resale price cannot be used merely because the parties are inter-connected undertakings; the assessee's own sale price is the proper basis for assessable value.

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Issues: Whether the goods cleared by the assessee to an inter-connected undertaking were required to be valued on the basis of the buyer's resale price, or on the transaction value charged by the assessee under Rules 9 and 10 of the valuation rules.

Analysis: The amended valuation framework distinguished between cases where the assessee sold goods except to or through a person related in the specified statutory sense and cases where the goods were sold only to or through an inter-connected undertaking. Rule 9 applied only where the relationship matched the specified categories in section 4(3)(b), while Rule 10(a) sent only such cases to Rule 9 and Rule 10(b) directed that in all other inter-connected undertaking cases the value be determined as if the parties were not related persons. On that structure, the department could not base valuation on the buyer's onward sale price merely because the parties were inter-connected undertakings.

Conclusion: The assessee's sale price to the buyer was the correct basis for assessable value, and the contrary valuation adopted by the department was unsustainable.

Final Conclusion: The impugned valuation order and duty demand were set aside, and the appeal succeeded.

Ratio Decidendi: Where goods are sold only to or through an inter-connected undertaking that is not related in the specific statutory sense attracting Rule 9, Rule 10(b) requires valuation on the footing that the parties are not related persons, so the assessee's own sale price governs assessable value.

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