Related-person valuation fails without proof of mutual business interest; common tenancy alone cannot justify retail-price assessment.

Related-person valuation under excise law cannot be sustained unless the revenue proves direct or indirect mutual interest in each other's business. A common tenancy of premises and transfer of rent to capital account, without more, is insufficient to establish the required relationship. The record also indicated sales to independent buyers at a discount, supporting the assessee's claimed discount structure. On these facts, the retail-price-based valuation adopted against the assessee failed, and the duty demand and personal penalty were set aside.

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Issues: Whether M/s. Punjab Sarbat House could be treated as a related person of the appellant for determining assessable value on the basis of the retail price and whether the duty demand and penalty were sustainable.

Analysis: The only basis for invoking related-person status was the common tenancy of premises and the movement of rent to the capital account. No other material was shown to establish that the appellant and M/s. Punjab Sarbat House had any direct or indirect interest in each other's business. The record also showed that some sales were made to independent buyers at a discount, which supported the appellant's claimed discount structure. In the absence of evidence establishing the relationship required for adopting the retail price of the alleged related person, the valuation adopted by the revenue could not stand.

Conclusion: M/s. Punjab Sarbat House was not proved to be a related person of the appellant, and the duty demand and personal penalty were set aside in favour of the assessee.

Ratio Decidendi: Related-person valuation cannot be sustained unless the revenue proves direct or indirect mutual interest in each other's business; a mere common tenancy or rent arrangement is insufficient.

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