Related-person valuation rules do not apply where corporate entities are not relatives and sales are not exclusively through one buyer.

Corporate entities are not "relatives" within the specified relationship under the Central Excise Act and Companies Act provisions, which confine that category to natural persons. Clearances between the manufacturer and its marketing entity therefore did not require related-person valuation on that basis. Rule 9 of the Central Excise Valuation Rules was also inapplicable because the manufacturer sold goods not exclusively through the marketing entity, but also to Government departments and for export. Earlier unreversed orders involving the same entities supported this position. The excise demands and penalties based on related-person valuation could not be sustained.

---

---

Issues: Whether clearances by one corporate entity to another were required to be valued under Rule 9 of the Central Excise Valuation Rules, 2000 on the footing that they were related persons.

Analysis: Section 4(3)(b)(ii) of the Central Excise Act, 1944 read with Section 2(41), Section 6 and Schedule 1A of the Companies Act, 1956 confines the specified relationship of relatives to natural persons. Corporate entities do not fall within that category. Rule 9 of the Central Excise Valuation Rules, 2000 also applies only where goods are sold exclusively through related persons; the manufacturer made sales to Government departments and for exports in addition to sales to the marketing entity. The issue stood covered by earlier un-reversed orders concerning the same entities.

Conclusion: The entities were not related persons for the stated valuation provisions, and Rule 9 was inapplicable; the impugned demands and penalties could not be sustained.

---