Related person valuation under section 4 requires mutuality of interest; mere common directors and no suppression barred extended limitation.

For valuation under section 4, related-person status requires mutuality of interest between buyer and seller and cannot be inferred merely from common directors or a one-way commercial relationship. On the facts stated, the buyer company was not a related person of the assessee. On limitation, disclosure of the price list and the buyer's status in returns, together with departmental awareness of the exemption framework, meant suppression of facts was not established; the extended limitation period was therefore unavailable. The duty demand did not survive, with relief following on both the valuation and limitation issues.

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Issues: (i) Whether the buyer company could be treated as a related person of the assessee for valuation purposes under section 4; (ii) whether the demand was barred by time on the ground that there was no suppression of facts.

Issue (i): Whether the buyer company could be treated as a related person of the assessee for valuation purposes under section 4.

Analysis: Common directors by themselves were held insufficient to establish relationship. The decisive requirement was mutuality of interest between buyer and seller. The fact that the assessee sold goods to or through the buyer company showed, at most, a one-way commercial interest of the buyer in the assessee's business. It did not establish reciprocal interest of the assessee in the business of the buyer company. On the facts found, the companies could not be treated as related persons.

Conclusion: The buyer company was not a related person of the assessee.

Issue (ii): Whether the demand was barred by time on the ground that there was no suppression of facts.

Analysis: The assessee had disclosed the relevant price list and had declared the buyer company as a related person in the returns submitted. The department was aware of the exemption under Notification No. 71/78 and ought to have verified the buyer's prices for computing the exemption limit. In these circumstances, suppression of facts was not established and the extended limitation period could not be invoked.

Conclusion: The demand was barred by limitation and was liable to be set aside.

Final Conclusion: The duty demand did not survive, and the assessee obtained relief on both substantive valuation and limitation grounds.

Ratio Decidendi: For valuation under section 4, related-person status requires mutuality of interest and cannot be inferred merely from common directors or a one-way commercial relationship; absent suppression of facts, the extended period of limitation is unavailable.

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