Arm's Length Sale Price accepted where turpentine deal showed no extra-commercial consideration and invoice value stood protected.

The sale price of primary bulk turpentine was held to be uninfluenced by extra-commercial considerations, so invoice value could be accepted for exemption purposes. The combined sale-and-purchase arrangement with distilled turpentine did not, by itself, show a non-commercial relationship or lack of arm's length dealing. The clause requiring any shortfall to be made up in the next year at the earlier rate was treated as a normal commercial term, and comparable first-year pricing, packing and handling adjustments, absence of any flow-back of proceeds, and only a nominal security deposit all supported the finding that the agreed price was the sole consideration. The department failed to justify interference, and the appeals were not maintainable on merits against the assessee.

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Issues: Whether the sale price of primary bulk turpentine was influenced by extra-commercial considerations so as to deny assessment at invoice value under the exemption notification.

Analysis: The agreement between the parties, though a combined arrangement for sale of primary bulk turpentine and purchase of distilled turpentine, did not by itself show any non-commercial relationship or lack of arm's length dealing. The clause requiring make-up of shortfall in the next year at the earlier rate was treated as a normal commercial stipulation. Comparable pricing for the first year, allowance for packing and handling differences, absence of any flow back of proceeds, and the nominal security deposit all supported the view that the agreed price was the sole consideration for the sales.

Conclusion: The sale price was not influenced by extra-commercial consideration, and the department failed to justify interference with the order in appeal. The appeals were therefore not maintainable on merits against the assessee.

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