Related person test requires mutuality of interest; non-uniform trade discount cannot be denied absent buyer awareness at clearance.

A buyer is treated as a related person only where there is mutuality of interest between the units, including direct or indirect association with the seller's business or a flow back of money. On the stated facts, no evidence established such mutuality or any money flow back, so the buyer was not a related person. Trade discount could not be disallowed merely because it was not uniform across buyers; the controlling consideration was whether the discount was known to the buyer at the time of clearance. On that basis, disallowance of the trade discount was unjustified.

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Issues: Whether the buyer could be treated as a related person under Section 4(e) of the Central Excises and Salt Act, 1944, and whether the trade discount could be disallowed on that basis.

Analysis: A person can be treated as a related person only if there is mutuality of interest between the units, meaning that the buyer is associated with the business of the assessee directly or indirectly, or there is flow back of money. On the facts, no evidence was found to establish mutuality of interest or any money flow back between the two units. Once the buyer was not found to be a related person, disallowance of trade discount could not stand merely because the discount was not uniform across buyers. The controlling consideration was whether the discount was known to the buyer at the time of clearance.

Conclusion: The buyer was not a related person and the disallowance of trade discount was unjustified.

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