Normal price valuation upheld where differential dealer pricing reflected commercial reasons and no extra-commercial influence was alleged.

Differential prices charged to dealers in different States were treated as the assessable normal price because the transactions were at arm's length and there was no allegation of extra-commercial consideration in the show cause notice. The price variation had a valid commercial basis, and local and outstation wholesale dealers could be regarded as different classes of buyers for valuation purposes. The departmental challenge therefore failed.

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Issues: Whether different prices charged to dealers in different States could be treated as the assessable value as normal price, in the absence of any allegation of extra-commercial consideration.

Analysis: The Collector (Appeals) found that the ingredients for determination of normal price were satisfied and that the transactions were at arm's length. There was no allegation in the show cause notice that the pricing was influenced by extra-commercial considerations. The differential prices were based on commercial reasons, and local and outstation wholesale dealers could be treated as different classes of buyers when the price variation had a valid commercial basis.

Conclusion: The differential prices were correctly treated as normal price and the departmental challenge failed.

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