Commission to independent dealers is deductible from assessable value when related-person status is not established.

Commission paid to independent dealers or selling agents for booking orders, execution of orders and after-sale services was held deductible from assessable value. The reasoning that such service functions alone made the dealers "related persons" was not accepted, because related-person status must rest on the statutory basis and not merely on distribution or service activities. On the facts noted, the notice did not proceed on related-person grounds, and the inclusion of commission in value was therefore unjustified. The demand was set aside and deduction of the commission was allowed with consequential relief.

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Issues: Whether the commission paid to dealers or selling agents was deductible from the assessable value and whether the dealers could be treated as related persons so as to justify inclusion of such commission in the value of the goods.

Analysis: The show cause notice did not proceed on the footing that the distributors were related persons, while the order-in-original disallowed deduction of commission on that basis. On merits, the commission was paid for services rendered by the dealers, including booking orders, execution of orders and after-sale services. The reasoning that after-sale service by itself made the dealers related persons was not accepted. The principles stated in the cited Supreme Court decisions were applied to hold that dealers are not related persons merely because they perform distribution and service functions.

Conclusion: The commission was deductible and the dealers could not be treated as related persons for the purpose of enhancing the assessable value.

Final Conclusion: The demand confirmed by the lower authority was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Commission paid to independent dealers for services rendered is not includible in assessable value merely because the dealers also provide after-sale services, unless the statutory basis for treating them as related persons is established.

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