Holding

The assessable value for related‑party sales can be determined by referring to the normal price under Section 4(1)(a) of the Central Excise Act, using Rule 11’s reasonable‑means approach, in conformity with the 01‑07‑2002 Circular.

Summary

The appellant‑Revenue issued a show‑cause notice alleging that the assessee, Merino Panel Product Ltd, had undervalued sales of excisable decorative laminates to its sister concerns (Merino Industries Ltd and Merino Services Ltd). The Revenue used Rule 11 of the Central Excise Valuation Rules, read with Section 4(1)(a) of the Central Excise Act, to transpose the price obtained from independent buyers onto the related‑party transactions. The CESTAT set aside the notice, holding that Section 4(1)(a) was inapplicable and that the CBEC Circular of 01‑07‑2002 required the use of Rule 11 together with Rule 9/10. On appeal, the Supreme Court held that the Circular is binding on the Revenue, but it does not conflict with the statute; the normal price under Section 4(1)(a) may be used as a benchmark for related‑party sales when it is readily available, provided the Revenue applies “reasonable means” under Rule 11. The demand for excise duty was confirmed, but the levy of interest and penalties was disallowed. The civil appeal was allowed in part.

Issues considered

The CBEC Circular dated 01‑07‑2002 is binding on the Revenue and whether it overrides the provisions of the Central Excise Act and Valuation Rules.
Whether the valuation method of transposing the independent‑buyer price under Section 4(1)(a) and Rule 11 is appropriate for partial sales to both independent and related parties.
Whether the show‑cause notice is invalid for citing an incorrect rule or methodology.
Whether interest and penalties can be levied in addition to the assessed excise duty.

Legislation cited

Central Excise Act, 1944s. 11A(1), s. 11A(4), s. 37B, s. 4(1)(a), s. 4(1)(b)
Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000s. Rule 11, s. Rule 4, s. Rule 9

Subjects

central excisevaluation of excisable goodsrelated party transactionsCBEC circularRule 11assessable valueinterest and penaltiestax law predictabilitystatutory interpretation

Judgment

28 [2022]
SUPREME COURT 18 S.C.R. 28
REPORTS [2022] 18 S.C.R.

A COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX,
ROHTAK
v.
MERINO PANEL PRODUCT LTD.
B (Civil Appeal No. 6891 of 2018)
DECEMBER 05, 2022
[SURYA KANT AND J.B. PARDIWALA, JJ.]
Central Excise Act, 1944 – s.4(1)(a) – Central Excise Valuation
(Determination of Price of Excisable Goods) Rules, 2000 – rr. 9, 11
C
– Customs, Excise and Service Tax Appellate Tribunal set aside the
show cause notice issued by the Appellant-Revenue to the Assessee-
Respondent, on the ground that it had invoked an incorrect method
of valuing related party transactions – Correctness of – Held: The
assessable value for the related party sales can be established by
D referring to the normal price u/s.4(1)(a) of the CEA, which is readily
available in the present case – This is the true meaning and intention
underlying the CBEC Circular of 01.07.2002 – Reference to r.11 in
Point No. 12 of the Circular simply mandates the usage of
“reasonable means” keeping in mind s.4(1)(a) of the CEA and r.9
of the CEVR – This is merely a method by which the Revenue is
E
required to apply its mind to a case of partial sales to both
independent and related parties – Point No. 12 in the Circular of
01.07.2002 is not contrary to the intent of the CEA and CEVR and
the object behind it is to merely use “reasonable means” as outlined
u/r.11 of the CEVR, in conformity with s.4(1)(a) of the CEA and r.9
F of the CEVR, so as to reach the assessable value of goods for
determination of excise duty – When the normal price that is
ordinarily charged in dealings where the price itself is the sole
consideration of the transaction is available, as it is here, that price
can be transposed onto the related party purchases as well, to arrive
at the assessable value – Hence, the order of the Commissioner
G
regarding the value of the goods sold to the Respondent’s sister
concerns is in consonance with Supreme Court’s earlier judgments
and the Circular dated 01.07.2002 – Demand made by the Appellant
is confirmed however, the levy of interest and penalties upon the

H
28
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 29
v. MERINO PANEL PRODUCT LTD.

Respondent is not approved – These amounts be reduced from the A
total recoverable amount from the Assessee.
Tax/Taxation – Held: Maintaining predictability in taxation
law is of utmost importance and, for this reason, the Court should
not accept an argument by the Revenue that waters down its own
Circular – Revenue’s stance against its own circular can potentially B
lead to a chaotic situation where, with one hand, the Revenue would
lay down instructions on how to interpret the relevant statutes and
rules, and with the other hand, it would promptly disobey those
very directions.
Central Excise Act, 1944 – s.4(1)(a), (b) – Held: Principles C
u/s.4(1) of the CEA are geared toward determination of the ‘value’
of goods – Under s.4(1)(a), the value of goods for the purposes of
excise duty, is deemed to be the ‘normal price’ of the goods that are
‘ordinarily sold’ in the course of business, and where the price is
the ‘sole consideration’ for the transaction – It is only when this
cannot be gleaned from the set of transactions available on record D
that s.4(1)(b) is resorted to.
Excise Duty – Determination of excise duty on related
transactions – Held: Price charged from independent parties for
the sale of excisable goods can be used as a benchmark for
determination of excise duty on related transactions when such a E
price is readily available – However, when making such calculations
via transposition, the Revenue cannot act in a mechanical way –
The assessment of the appropriate value of the related party
transaction must be made after considering relevant material and
due application of mind – The entire quasi-judicial process of issuing F
a show cause notice and considering the distinguishing factors
placed by the Assessee must be completed before the price of sales
to independent buyers is utilized as a benchmark for sales to related
parties – The general principles of s.4(1) of the CEA, r/w r.11 of the
CEVR, are meant to provide a pathway for determination of the
“normal price” and “value” of goods in cases where no alternative G
methodology is applicable – This fulfils the dual objectives of being
in consonance with the Circular dated 01.07.2002 and harmonizing
different provisions of the CEA and CEVR – Central Excise Act,
1944 – s.4(1) – Central Excise Valuation (Determination of Price
of Excisable Goods) Rules, 2000 – r.11. H
30 SUPREME COURT REPORTS [2022] 18 S.C.R.

A Central Excise Act, 1944 – s. 4(1) – Presumption under –
Discussed – Central Excise Valuation (Determination of Price of
Excisable Goods) Rules, 2000 – rr. 9, 11.
Commissioner of Central Excise, Bolpur v. Ratan
Melting and Wire Industries (2008) 13 SCC 1: [2008]
14 SCR 653 – followed.
B
The Paper Products Ltd. v. Commissioner of Central
Excise (1999) 7 SCC 84; Ranadey Micronutrients &
Ors. v. Collector of Central Excise (1996) 10 SCC 387:
[1996] 5 Suppl. SCR 755; Kalyani Packaging
Industry v. Union of India (2004) 6 SCC 719;
C Commissioner of Central Excise, Mumbai v. FIAT India
(P) Ltd. & Ors. (2012) 9 SCC 332: [2012] 12 SCR
975 ; Commissioner of Central Excise, Ahmedabad v.
Xerographic Ltd. (2006) 9 SCC 556 ; SACI Allied
Products Ltd., U.P. v. Commissioner of Central Excise,
Meerut (2005) 7 SCC 159 : [2005] 3 SCR 881 – relied
D on.
Aquamall Water Solutions v. CCE. 2003 SCC OnLine
CEGAT 119; Reliance Industries v. CCE, Surat 2009
SCC OnLine CESTAT 3384; J.K. Steel Ltd. v. Union
of India [1969] 2 SCR 481; Collector of Central Excise,
Calcutta v. Pradyumna Steel Ltd. (2003) 9 SCC 234;
E Collector of Central Excise, Vadodara v. Dhiren
Chemicals Industries (2002) 2 SCC 127; Assistant
Commissioner of Income Tax (Exemptions) v.
Ahmedabad Urban Development 2022 SCC OnLine SC
1461 – referred to.
F Case Law Reference
[1969] 2 SCR 481 referred to Para 13
(2003) 9 SCC 234 referred to Para 13
(1999) 7 SCC 84 relied on Para 17
[1996] 5 Suppl SCR 755 relied on Para 18
G (2002) 2 SCC 127 referred to Para 20
(2004) 6 SCC 719 relied on Para 21
[2008] 14 SCR 653 followed Para 22
[2012] 12 SCR 975 relied on Para 29
(2006) 9 SCC 556 relied on Para 30
H [2005] 3 SCR 881 relied on Para 31
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 31
v. MERINO PANEL PRODUCT LTD.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6891 A
of 2018.
From the Judgment and Order dated 30.11.2017 of the Customs,
Excise & Service Tax Appellate Tribunal, Chandigarh in Appeal No. E/
50664/2015.
Balbir Singh, ASG, M.K. Maroria, Rupesh Kumar, Devashish B
Bharuka, Samar Veer Singh, Prasenjeet Mohapatra, Naman Tandon,
Shyam Gopal, B. Krishna Prasad, Advs. for the Appellant.
S. Sunil, Jagdish N., Sudarshan Singh Rawat, Sunny Sachin Rawat,
Advs. for the Respondent.
C
The Judgment of the Court was delivered by
SURYA KANT, J.
1. The present Civil Appeal originates from the impugned order
dated 30.11.2017 passed by the Customs, Excise and Service Tax
Appellate Tribunal, Chandigarh (“CESTAT”). The CESTAT set aside D
the show cause notice issued by the Appellant-Revenue to the Assessee-
Respondent, on the ground that it had invoked an incorrect method of
valuing related party transactions.
A. FACTUAL BACKGROUND
2. The Assessee is involved in the manufacture of decorative E
laminates and other like materials, which fall under Chapter 48 of the
Central Excise Tariff Act, 1985. As excisable goods, the value at which
the Respondent was selling these goods would be the determinant for
the amount of tax recoverable by the Appellant. Following an audit
conducted on the Assessee’s operations for FY 2009-10 and 2010-11, F
discrepancies were unearthed in terms of the prices at which these goods
were being sold. The goods were being offered not only to independent
parties unconnected with the Respondent, but also to two ‘related parties’
called “Merino Industries Ltd.” (“MIL”) and “Merino Services Ltd.”
(“MSL”), as defined under Section 4(3)(b)(i) of the Central Excise Act,
19441 (“CEA”) read with Section 2(g) of the Monopolies and Restrictive G
1
Section 4. Valuation of excisable goods for purposes of charging of duty of
excise -
(3) For the purpose of this section,-
(a) “assessee” means the person who is liable to pay the duty of excise under
this Act and includes his agent;
H
32 SUPREME COURT REPORTS [2022] 18 S.C.R.

A Trade Practices Act, 1969.2 It was ascertained that Respondent was a
subsidiary of MIL with 74.65% of its shareholding vested in the latter.
With regard to MSL, the Assessee was found to have significant influence
over its operations and the two companies shared Directors/Key
Managerial Personnel.
B 3. The sales to these related entities were discovered to be
undervalued in comparison to those made by the Assessee to non-related
independent entities. This artificial devaluation resulted in a shortfall in
collection of excise duty due to the deliberate deflation of the price by
the Assessee when selling goods to its related party concerns. Hence,
the assessable value of the excisable materials had to be established in
C order to then calculate the correct amount of excise duty to be levied.
4. The assessable value of excisable goods is worked out via
Section 4(1) of the CEA. As we will repeatedly be referring to this
provision at a later stage, a reproduction of its relevant portion is
necessary at this point:-
D
Section 4. Valuation of excisable goods for purposes
of charging of duty of excise. –
(1) Where under this Act, the duty of excise is
chargeable on any excisable goods with reference to
E their value, then, on each removal of the goods, such
value shall –
(a) in a case where the goods are sold by the assessee,
for delivery at the time and place of the removal, the
assessee and the buyer of the goods are not related
F and the price is the sole consideration for the sale,
be the transaction value;
(b) in any other case, including the case where the
goods are not sold, be the value determined in such
manner as may be prescribed.
G (b) persons shall be deemed to be “related” if -
(i) they are inter-connected undertakings;
…
Explanation - ….
2
2. Definitions. – In this Act, unless the context otherwise requires, -
(g) “inter-connected undertakings” means two or more undertakings which
are inter-connected with each other in any of the following manner, namely:-
H …
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 33
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

Explanation. - For the removal of doubts, it is hereby A
declared that the price-cum-duty of the excisable
goods sold by the assessee shall be the price actually
paid to him for the goods sold and the money value
of the additional consideration, if any, flowing
directly or indirectly from the buyer to the assessee
B
in connection with the sale of such goods, and such
price-cum-duty, excluding sales tax and other taxes,
if any, actually paid, shall be deemed to include the
duty payable on such goods.
5. The wording of the sub-sections indicates that Section 4(1)(a)
of the CEA is relevant for sales to independent parties, while Section C
4(1)(b) addresses all other cases including sales made to related parties.
Due to the fact that sales in the present case were made by Respondent
to both independent and related parties, the latter part of Section 4(1)
was deemed applicable, read with the Central Excise Valuation
(Determination of Price of Excisable Goods) Rules, 2000 (“CEVR”). D
6. The show cause notice issued by the Revenue noted that the
CEVR did not contain any guidelines on the methodology to be adopted
for discovering the assessable value of goods, when sales are made
partially to both independent parties and related parties. For our purposes
it is not necessary to go over every provision within the CEVR. The E
show cause notice narrowed the scope of inquiry down to Rules 4 & 9-
11, which are provided below:-
Rule 4.
The value of the excisable goods shall be based on
the value of such goods sold by the assessee for F
delivery at any other time nearest to the time of the
removal of goods under assessment, subject, if
necessary, to such adjustment on account of the
difference in the dates of delivery of such goods and
of the excisable goods under assessment, as may G
appear reasonable.
Rule 9.
When the assessee so arranges that the excisable
goods are not sold by an assessee except to or through
H
34 SUPREME COURT REPORTS [2022] 18 S.C.R.

A a person who is related in the manner specified in
either of sub-clauses (ii), (iii) or (iv) of clause (b) of
sub-section (3) of section 4 of the Act, the value of
the goods shall be the normal transaction value at
which these are sold by the related person at the time
of removal, to buyers (not being related person); or
B
where such goods are not sold to such buyers, to
buyers (being related person), who sells such goods
in retail :
Provided that in a case where the related person does
not sell the goods but uses or consumes such goods
C in the production or manufacture of articles, the
value shall be determined in the manner specified
in rule 8.
Rule 10.
When the assessee so arranges that the excisable
D goods are not sold by him except to or through an
inter-connected undertaking, the value of the goods
shall be determined in the following manner,
namely:-
(a) If the undertakings are so connected that
E they are also related in terms of sub-clause (i)
or (iii) or (iv) of clause (b) of sub-section (3) of
section 4 of the Act or the buyer is a holding
company or subsidiary
Explanation. – In this clause “holding
company” and “subsidiary company” shall
F have the same meanings as in the Company
Act, 1956 (1 of 1956).
(b) In any other case, the value shall be
determined as if they are not related persons
for the purpose of sub-section (1) of section 4.
G Rule 11.
If the value of any excisable goods cannot be
determined under the foregoing rules, the value shall
be determined using reasonable means consistent
with the principles and general provisions of these
rules and sub-section (1) of section 4 of the Act.
H
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 35
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

7. A bare reading of the extracted provisions indicates that Rules A
9 & 10 are applicable only in situations where the entire batch of goods
is sold to a related party. This would have ordinarily excluded the
applicability of those Rules in the present case, given that the Assessee
was selling its products partially to both independent and related buyers.
The only remaining option would have been taking recourse to Rule 11,
the residuary provision which addresses scenarios that are not otherwise B
covered by the CEVR. The Rule refers back to Section 4(1)(a) of the
CEA and outlines a broad requirement to determine the assessable value
of the goods while keeping in mind the “principles and general
provisions” of the CEVR.
8. The Revenue in the show cause notice duly invoked Rule 11 C
read with Section 4(1)(a), and also placed reliance on an earlier decision
of the CESTAT, Bangalore, in Aquamall Water Solutions v. CCE.3 It
was noted that the holding of the Tribunal had been affirmed by the
Supreme Court in appeal.4 On the strength of this, the show cause notice
stated that the transaction value of the goods sold to the independent
buyers would be transposed onto the sales made by the Assessee to its D
sister concerns in order to determine the appropriate excise duty
chargeable. After undertaking the comparison between the two prices,
the Revenue determined that the undervaluation of the sales to the related
parties amounted to Rs. 24,14,05,257, and resulted in a shortfall in payment
of Rs. 3,15,13,343 in excise duty. Further, due to the purported suppression
of the differential in the prices at which the goods were being sold, the E
extended period of limitation of 5 years was invoked under the Proviso
to Section 11A(1) & (4) of the CEA.5
9. The Assessee disputed the contents of the notice before the
Commissioner. One of the contentions raised was that the Revenue had
incorrectly invoked Rule 11 of the CEVR, read with Section 4(1) of the F
CEA, to value the goods that were sold to the Respondent’s alleged
3
2003 SCC OnLine CEGAT 119.
4
2006 (193) ELT A197 (SC).
5
Section 11A. Recovery of duties not levied or not paid or short-levied or short-
paid or erroneously refunded.-
G
(1) Where any duty of excise has not been levied or paid or has been short-
levied or short-paid or erroneously refunded, for any reason, other than the reason of
fraud or collusion or any wilful misstatement or suppression of facts or contravention
of any of the provisions of this Act or of the rules made thereunder with intent to evade
payment of duty,-
(a) the Central Excise Officer shall, within one year from the relevant date,
serve notice on the person chargeable with the duty which has not been so levied or H
36 SUPREME COURT REPORTS [2022] 18 S.C.R.

A sister concerns. The Department itself had issued a Circular on
01.07.20026 which clarified the manner in which valuation was to be
done when sales are made to both independent and related buyers. The
Circular stated:

B

C

D

paid or which has been so short-levied or short-paid or to whom the refund has
E erroneously been made, requiring him to show cause why he should not pay the
amount specified in the notice;
(b) the person chargeable with duty may, before service of notice under
clause (a), pay on the basis of,-
(i) his own ascertainment of such duty; or
(ii )the duty ascertained by the Central Excise Officer, the amount of duty
along with interest payable thereon under section 11AA.
F …
(4) Where any duty of excise has not been levied or paid or has been
shortlevied or short-paid or erroneously refunded, by the reason of-
(a) fraud; or
(b) collusion; or
(c) any wilful mis-statement; or
(d) suppression of facts; or
G (e) contravention of any of the provisions of this Act or of the rules made
thereunder with intent to evade payment of duty,
by any person chargeable with the duty, the Central Excise Officer shall,
within five years from the relevant date, serve notice on such person requiring him to
show cause why he should not pay the amount specified in the notice along with
interest payable thereon under section 11AA and a penalty equivalent to the duty
specified in the notice.
6
H No. 643/34/2002-CX
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 37
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

10. The Assessee took the stand that the valuation method adopted A
in the show cause notice for determining the transaction value for goods
sold to related parties was contrary to the Circular. The Circular had
been followed by the CESTAT, Ahmedabad, in Reliance Industries v.
CCE, Surat7 where the Tribunal had noted that the formula outlined in
Point No. 12, as reproduced above, for undertaking the valuation had B
not been contravened by any judicial forum. Thus, it was not open for
the Department to go against its own administrative directions and the
show cause notice was defective and void ab initio on account of being
contrary to the Revenue’s interpretation of the CEVR.
11. The Commissioner rejected this argument after noting that C
the show cause notice had adhered to the spirit of Rule 11 by extrapolating
the transaction value of the sales to the related parties from the price
charged to independent buyers. This fulfilled the requirement of using
“reasonable means” under Rule 11 while arriving at the assessable value,
and was also in conformity with Section 4(1) of the CEA. Further backing D
for the correctness of this approach was drawn from different holdings
by CESTAT Tribunals, including the aforementioned decision in Aquamall
Water Solutions (Supra). The Commissioner asserted that there was
nothing inconsistent between the Circular of 01.07.2002 and the
conclusions arrived at in respect of the correctness of the valuation E
method invoked by the Revenue.
12. Eventually, the demand in the show cause notice was confirmed,
along with a penalty of Rs. 2,34,42,050 and interest, prompting the
Assessee proceeded to lodge an appeal before the CESTAT, Chandigarh.
F
The CESTAT set aside confirmation order passed by the Commissioner
and allowed the Respondent’s appeal while holding:
i) Section 4(1)(a) of the CEA was not applicable as it referred to
sales made exclusively to independent buyers. As part of the
sales by the Assessee in the present case were to related buyers, G
reliance had to be placed on Section 4(1)(b) instead;
ii) The CBEC Circular of 01.07.2002 clarified the methodology to
be adopted for determining the value of goods when sales are
7
2009 SCC OnLine CESTAT 3384. H
38 SUPREME COURT REPORTS [2022] 18 S.C.R.

A made to both independent and related buyers i.e. resort to Rule
11 read with either Rule 9 or 10 of the CEVR;
iii) The CESTAT in Reliance Industries (Supra) had affirmed the
usage of the formula as provided in the Circular. The decision in
Aquamall Water Solutions (Supra) relied upon by the
B Commissioner was distinguishable on facts, as the dispute in
that instance exclusively involved transfer of goods solely to
related parties;
iv) The show cause notice by the Revenue sought to assess the
C value of the goods by relying on Rule 11 of the CEVR, read with
Rule 4 and Section 4(1)(a) of the CEA. This was contrary to the
CBEC Circular and rendered the notice defective and
unenforceable;
v) Consequently, the order of the Commissioner affirming a
D defective show cause notice would, necessarily, have to be set
aside as well.
The Appellant-Revenue is now in appeal before us.
B. SUBMISSIONS
E
13. Mr. Balbir Singh, learned Additional Solicitor General, has
assailed the impugned order of the CESTAT on the following grounds:-
i) There is no dispute regarding the fact that there was an
undervaluation of sales made by the Assessee to the related
F parties;
ii) There is no requirement in law for there to be a specific manner
in which the relevant Sections and/or Rules are quoted in a show
cause notice. Rule 9, which the CESTAT concludes is the
appropriate provision in this case, was mentioned in the show
G
cause;
iii) Even if it is considered that the show cause notice did not
sufficiently specify the relevant Rules, this has no consequence

H
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 39
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

on its validity. It has long been established by this Court through A
successive judgments in J.K. Steel Ltd. v. Union of India8 and
Collector of Central Excise, Calcutta v. Pradyumna Steel
Ltd.9 that mere invocation of an incorrect provision as the source
of a power is irrelevant, provided the power itself actually exists;
iv) The show cause notice merely cited the most apt method of B
ascertaining the independent selling price and the proper
assessable value for the goods, in line with the spirit of Section
4(1) of the CEA;
v) In any case, Rule 9 of the CEVR cannot cover the specific factual
scenario of the present dispute which involves sales made to C
both independent and related parties, as the scope of the provision
is confined only to sales made to the latter.
14. On the contrary, Mr. S. Sunil, learned Counsel for the
Respondent, has supported the holding of the CESTAT by drawing our
attention to the following:- D
i) The CBEC Circular of 01.07.2002 mandates the usage of Rule
11 read with either Rule 9 or 10 of the CEVR for ascertaining
the value of excisable goods when sales are effected to both
independent and related purchasers;
ii) The Circular is binding on the Revenue and it is not open for E
them to take a contrary stand. Various decisions of the Supreme
Court support the proposition that the Department cannot act in
contravention of its own administrative instructions as contained
in its Circulars;
iii) Any departure from the Circular would have required either its F
modification or withdrawal. As the Revenue has done neither, it
is not open for them to take an alternative stance;
iv) Apart from this, the show cause notice has invoked Rule 4 of
the CEVR which is applicable only when the sale of goods does
not take place at the time of removal from the factory. There is G

8
(1969) 2 SCR 481.
9
(2003) 9 SCC 234. H
40 SUPREME COURT REPORTS [2022] 18 S.C.R.

A no dispute over the fact that sales were effectuated at the time
of removal itself by the Assessee;
v) Regardless of whether the show cause notice is defective, the
invocation of the extended period of limitation and the imposition
of penalties under the CEA are unwarranted.
B Having benefitted from the assistance of both parties, we may
now examine their rival contentions.
C. ANALYSIS
C.1. BINDING NATURE OF CIRCULARS ISSUED BY THE DEPARTMENT
C 15. On first blush, it appears that the arguments from the Appellant-
Revenue and Respondent-Assessee are on two separate footings. While
the former assails the specific reasoning given by the CESTAT for setting
aside the show cause notice in terms of invocation of an incorrect part
of the CEVR, the latter is more concerned with the binding nature of the
D CBEC Circular issued by the Revenue itself.
16. It is clear that the latter question goes to the heart of the
matter, rather than the issue of whether the show cause notice becomes
legally untenable for failure to expressly mention that the valuation of
the goods is to be done under Rule 11 read with Rule 9 of the CEVR. On
the legal proposition advanced by learned ASG, we readily affirm that
E
citation of an incorrect source of power does not vitiate the exercise of
the power itself provided the power vests in the authority to begin with.
17. However, what needs to be additionally ascertained is whether
the Appellant acted in contravention of its own Circular. The reason for
this is that while citation of an incorrect provision may not, by itself, lead
F
to an invalidation of the show cause notice, but contravention of a binding
circular that mandates a particular methodology to be followed might.
The power under the CEA for issuance of such administrative/executive
directions is contained in Section 37B.10 The binding nature of such
10
Section 37B. Instructions to Central Excise Officers. -
G The Central Board of Excise and Customs constituted under the Central
Boards of Revenue Act, 1963 (54 of 1963), may, if it considers it necessary or expedient
so to do for the purpose of uniformity in the classification of excisable goods or with
respect to levy of duties of excise on such goods or for the implementation of any other
provision of this Act, issue such orders, instructions and directions to the Central
Excise Officers as it may deem fit, and such officers and all other persons employed in
H
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 41
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

Circulars has long been acknowledged by this Court. In The Paper A
Products Ltd. v. Commissioner of Central Excise11 the settled position
on this point of law was noted in the following passage:
“4. The question for our consideration in these
appeals is: what is the true nature and effect of the
Circulars issued by the Board in exercise of its power B
under Section 37-B of the Central Excise Act, 1944?
This question is no more res integra in view of the
various judgments of this Court. This Court in a
catena of decisions has held that the Circulars issued
under Section 37-B of the said Act are binding on
the Department and the Department cannot be C
permitted to take a stand contrary to the instructions
issued by the Board. These judgments have also held
that the position may be different with regard to an
assessee who can contest the validity or legality of
such instructions but so far as the Department is D
concerned, such right is not available.”
18. The rationale behind the requirement for the Revenue to abide
by its own administrative directions and interpretation of different parts
of the CEA and CEVR, was commented upon in Ranadey
Micronutrients & Ors. v. Collector of Central Excise 12: E
“15. There can be no doubt whatsoever, in the
circumstances, that the earlier and later circulars
were issued by the Board under the provisions of
Section 37B, and the fact that they do not so recite
does not mean that they do not bind Central Excise F
officers or become advisory in character. There can
be no doubt whatsoever that after 21st November,
1994, Excise duty could be levied upon
the execution of this Act shall observe and follow such orders, instructions and directions
of the said Board :
Provided that no such orders, instructions or directions shall be issued-
G
a) so as to require any Central Excise Officer to make a particular assessment
or to dispose of a particular case in a particular manner; or
b) so as to interfere with the discretion of the Commissioner of Central Excise
(Appeals) in the exercise of his appellate functions.
11
(1999) 7 SCC 84.
12
(1996) 10 SCC 387. H
42 SUPREME COURT REPORTS [2022] 18 S.C.R.

A micronutrients only under the provisions of heading
31.05 as “other fertilisers”. If the later circular is
contrary to the terms of the statute, it must be
withdrawn. While the later circular remains in
operation the Revenue is bound by it and cannot be
allowed to plead that it is not valid.
B
16. We reject the submission to the contrary made by
learned counsel for the Revenue and in the affidavit
by M.K. Gupta, working as Director in the
Department of Revenue, Ministry of Finance. One
should have thought that an officer of the Ministry
C of Finance would have greater respect for circulars
such as these issued by the Board, which also
operates under the aegis of the Ministry of Finance,
for it is the Board which is, by statute, entrusted with
the task of classifying excisable goods uniformly. The
D whole objective of such circulars is to adopt a uniform
practice and to inform the trade as to how a
particular product will be treated for the purposes of
Excise duty. It does not lie in the mouth of the Revenue
to repudiate a circular issued by the Board on the
basis that it is inconsistent with a statutory provision.
E Consistency and discipline are of far greater
importance than the winning or losing of court
proceedings.”
19. Thus, the starting point of our analysis on this question is that
the CBEC Circular of 01.07.2002 is binding on the Revenue. If the show
F cause notice issued by the Revenue is found to be contrary to the Circular,
it would prima facie result in abrogation of the uniformity and consistency
which is strongly emphasized upon in Ranadey Micronutrients (Supra).
It goes without saying that the Revenue’s stance against its own circular
can potentially lead to a chaotic situation where, with one hand, the
G Revenue would lay down instructions on how to interpret the relevant
statutes and rules, and with the other hand, it would promptly disobey
those very directions. Maintaining predictability in taxation law is of utmost
importance and, for this reason, the Court should not accept an argument
by the Revenue that waters down its own Circular as this would fall
squarely within the contours of the prohibition outlined in Paper Products
H (Supra).
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 43
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

C.2. CONFLICT BETWEEN A CIRCULAR, AND A JUDGMENT AND/OR A
THE STATUTE
20. While the Department’s hands are tied with regard to its
Circulars, no such prohibition operates on Courts and Tribunals. It is
incumbent upon the adjudicatory bodies to ascertain the correct position
of law unencumbered by the Revenue’s interpretation as crystallized in B
its administrative directions. A Constitution Bench of this Court in
Collector of Central Excise, Vadodara v. Dhiren Chemicals
Industries13 while interpreting an exemption notification issued under
the CEA, had noted in Para 11 of its judgment that “…regardless of the
interpretation that we have placed on the said phrase
[“appropriate”], if there are circulars which have been issued by C
the Central Board of Excise and Customs which place a different
interpretation upon the said phrase, that interpretation will be binding
upon the Revenue.”
21. Dhiren Chemicals (Supra) subsequently led to some
uncertainty, as the paragraph reproduced above was interpreted to mean D
that Circulars issued by the Revenue would remain binding even if they
went against the ratio of decisions by this Court. However, the true
intention behind the passage, as recounted above, was clarified in Kalyani
Packaging Industry v. Union of India14 by observing that:
“6. We have noticed that Para 9 (para 11 in SCC) of E
Dhiren Chemical’s case is being misunderstood. It
therefore becomes necessary to clarify Para 9 of
Dhiren Chemical’s case. One of us (Variava, J.) was
a party to the Judgment of the Dhiren Chemical’s
case and knows what was the intention in F
incorporating Para 9. It must be remembered that
law laid down by this Court is law of the land. The
law so laid down is binding on all Courts/Tribunals
and Bodies. It is clear that circulars of the Board
cannot prevail over the law laid down by this Court.
However, it was pointed out that during hearing of G
Dhiren Chemical’s case because of circulars of the
Board in many cases the Department had granted

13
(2002) 2 SCC 127.
14
(2004) 6 SCC 719. H
44 SUPREME COURT REPORTS [2022] 18 S.C.R.

A benefits of exemption Notifications. It was submitted
that on the interpretation now given by this Court in
Dhiren Chemical’s case, the Revenue was likely to
reopen cases. Thus Para 9 was incorporated to ensure
that cases where benefits of exemption Notification
had already been granted, the Revenue would remain
B
bound. The purpose was to see that such cases were
not reopened. However, this did not mean that even
in cases where Revenue/Department had already
contended that the benefit of an exemption
Notification was not available, and the matter was
C sub-judice before a Court or a Tribunal, the Court or
Tribunal would also give effect to circulars of the
Board in preference to a decision of the Constitution
Bench of this Court. Where as a result of dispute the
matter is sub-judice a Court/Tribunal is, after Dhiren
Chemical’s case, bound to interpret as set out in that
D
judgment. To hold otherwise and to interpret in the
manner suggested would mean that Courts/Tribunals
have to ignore a judgment of this Court and follow
circulars of the Board. That was not what was meant
by Para 9 of Dhiren Chemical’s case.”
E 22. Following this, the position of law which materialized was that
the Revenue was at liberty to issue Circulars on the interpretation or
application of different provisions, but Courts and Tribunals would give
effect to the decisions of the Supreme Court as the law of the land.
Another Constitution Bench of this Court in Commissioner of Central
F Excise, Bolpur v. Ratan Melting and Wire Industries 15 drew a line in
the sand with regard to any future confusion on this point, in definitive
terms and held as follows:
“7. Circulars and instructions issued by the Board
are no doubt binding in law on the authorities under
G the respective statutes, but when the Supreme Court
or the High Court declares the law on the question
arising for consideration, it would not be appropriate
for the Court to direct that the circular should be

15
(2008) 13 SCC 1.
H
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 45
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

given effect to and not the view expressed in a A
decision of this Court or the High Court. So far as
the clarifications/circulars issued by the Central
Government and of the State Government are
concerned they represent merely their understanding
of the statutory provisions. They are not binding upon
B
the court. It is for the Court to declare what the
particular provision of statute says and it is not for
the Executive. Looked at from another angle, a
circular which is contrary to the statutory provisions
has really no existence in law.”
23. The other aspect of the dispute deals with whether the plain C
wording of Rule 9 of the CEVR abrogates the Circular in any way. On
this point, a very recent decision of this Court by a 3-Judge Bench in
Assistant Commissioner of Income Tax (Exemptions) v. Ahmedabad
Urban Development16 has provided an interpretation of various past
decisions, including the Constitution Bench in Ratan Melting (Supra), D
and laid down that:
“131. In the opinion of this court, the views expressed
in Keshavji Ravji, Indian Oil Corporation and Ratan
Melting and Wire Industries (though the last decision
does not cite Navnit Lal Jhaveri), reflect the correct E
position, i.e., that circulars are binding upon
departmental authorities, if they advance a
proposition within the framework of the statutory
provision. However, if they are contrary to the plain
words of a statute, they are not binding. Furthermore,
they cannot bind the courts, which have to F
independently interpret the statute, in their own terms.
At best, in such a task, they may be considered as
departmental understanding on the subject and have
limited persuasive value. At the highest, they are
binding on tax administrators and authorities, if they G
accord with and are not at odds with the statute; at
the worst, if they cut down the plain meaning of a
statute, or fly on the face of their express terms, they
are to be ignored.”
16
2022 SCC OnLine SC 1461
H
46 SUPREME COURT REPORTS [2022] 18 S.C.R.

A 24. However, as we will elaborate upon below, we do not agree
that there exists any conflict between the Circular dated 01.07.2002,
and provisions of the CEVR at all. In any case, in the legal background
set out above, even if we were to conclude that the provisions relied
upon in the show cause notice was incorrect such a defect is curable
and cannot be enough for the notice itself to be set aside.
B
25. As correctly submitted by learned ASG, invocation of the
incorrect methodology for arriving at the assessable value is immaterial
to the validity of the notice provided that the power itself existed. In this
case, the residuary Rule 11 of the CEVR provides the basis for
determining the assessable value of the goods in line with the principles
C contained in Section 4(1) of the CEA. Thus, the existence of the power
is not in question and neither has the Respondent denied this.
26. We must not, however, lose sight of the distinction between
the basis of the liability to pay additional excise duty, and the determination
of the actual amount. The former is the bedrock on which the show
D cause notice lies and will form the foundation for further proceedings
against the assessee. If the notice alleges shortfall in payment of excise
duty on completely non-existent and inapplicable grounds, the proceedings
would be vitiated by the simple reason that assessees have a right to
know in clear and unambiguous terms the exact nature of their liability.
E Assessees can only frame a response defending themselves based on
the infractions that have been pointed out in the show cause. If,
subsequently, the Revenue argues that an incorrect provision was cited
and the liability in fact arises from a different source altogether, the
assessee would be left in an untenable position as it would have only
responded to what was stated in the show cause notice itself.
F
C.3. METHOD OF VALUATION FOR DETERMINING ASSESSABLE VALUE
27. Based on our reliance on Ratan Melting (Supra) and
Ahmedabad Urban Development (Supra) we have no reason to doubt
that if a circular has been issued contrary to statutory provisions or in
G defiance of the interpretation of such provisions by a judicial forum, the
circular in question would be stripped of any binding force. The larger
question that we must answer is whether the CBEC Circular of 01.07.2002
is, at all, contrary to either the CEA or the CEVR. A close reading of
Section 4 of the CEA and Rules 4, 9 and 11 of the CEVR are necessary
for this exercise. Rule 4, as we have noted already, is inapplicable in this
H
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 47
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

case as it addresses situations where goods are not sold at the time of A
removal from the factory of the manufacturer. In this case, the
Respondent-Assessee admittedly sold the goods upon removal itself,
hence Rule 4 is of no relevance.
28. Rule 9 addresses the valuation of excisable goods when sales
are to related parties. Thus, we will focus on Section 4(1)(b) of the B
CEA, and Rules 9 & 11 of the CEVR. This final limb of our examination
will be to determine the method adopted for valuation in cases of partial
sales to both independent and related purchasers. Since Rule 11 merely
refers back to the principles under the CEVR as a whole read with
Section 4(1) of the CEA, it is arguable that there is still a gap in terms of
how to proceed with the assessment. In normal circumstances, we may C
have left this responsibility to the Department but given the history of
the case, we find it appropriate to fill in the blanks ourselves.
29. In fact, a solution to this problem already exists and it is drawn
from the notion of “value” that exists under Section 4(1) of the CEA.
This Court in Commissioner of Central Excise, Mumbai v. FIAT India D
(P) Ltd. & Ors.17 has commented on the deeming fiction created by
Section 4(1) in the following manner:
“41. Section 4 of the Act, as we have already noticed,
speaks of valuation of excisable goods, with
reference to their value. The ‘value’ subject to other E
stipulation in Section 4 is deemed to be the ‘normal
price’ at which the goods are ‘ordinarily’ sold to the
buyer in the course of ‘wholesale trade’ where the
buyer is not ‘related person’ and the ‘price’ is the
‘sole consideration’ for the sale. Against this F
background, for the purpose of this case, we have
now to consider the meaning of the words ‘value’,
‘normal price’, ‘ordinarily sold’ and ‘sole
consideration’, as used in Section 4(1)(a) of the Act.
42. The ‘value’ in relation to excisable commodity G
means normal price or the price at which the goods
are ordinarily sold by the assessee to a buyer in the
course of wholesale trade at the time and place of
removal where the buyer is not a related person and
17
(2012) 9 SCC 332. H
48 SUPREME COURT REPORTS [2022] 18 S.C.R.

A price is the sole consideration for sale. Stated another
way, the Central Excise duty is payable on the basis
of the value. The assessable value is arrived on the
basis of Section 4 of the Act and the Central Excise
Valuation Rules.
B 43. Section 4(1)(a) deems the ‘normal price’ of the
assessee for selling the excisable goods to buyers to
be the value of the goods for purpose of levy of excise
duty. The expression ‘normal price’ is not defined
under the Act.”
C 30. In Commissioner of Central Excise, Ahmedabad v.
Xerographic Ltd.18 which was in the context of transactions between
related persons, the contrast between “normal price” and the price
charged from ‘related parties’ was highlighted:
“6. Section 4(4)(c) defines the expression “related
D persons” and the said section has to be read in the
context of third proviso to Section 4(1)(a). On the
reading of the entire section it is clear that three
conditions are required to be satisfied before invoking
the third proviso. Firstly, there should be mutuality
of interest; secondly, that the alleged related person
E should be related to the assessee as per definition of
Section 4(4)(c) given in the Act and thirdly, and
importantly, that the price charged from the “related
persons” was not the normal price by the price lower
than the normal price and because of extra-
F commercial considerations the price charged was
less than the normal value.”
31. In the present case, the factors mentioned in Xerographic
Ltd. (Supra) have been clearly fulfilled as MIL and MSL were charged
below the price that was imposed on independent buyers due to extra-
G commercial considerations. Hence, we can determine the price of goods
sold to related parties by perusing the price at which the sales were
made to independent parties. In SACI Allied Products Ltd., U.P. v.
Commissioner of Central Excise, Meerut19 the facts were very similar
18
(2006) 9 SCC 556.
19
H (2005) 7 SCC 159.
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 49
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

to the case before us. The sales by the Assessee were made to both A
‘independent’ and ‘related’ parties and the question that arose was
regarding fixing the assessable value of the goods that were conveyed
to the latter entities. The 3-Judge Bench held that:
19. …We have already extracted Section 4(1)(a) of
the Act and the third proviso to Section 4(1)(a) of the B
Act in paragraph supra. In the present case, normal
price satisfying the requirements of Section 4(1)(a)
of the Act is available and there is no dispute on this
factual position. About 35% of the production of the
goods is sold by the appellants to independent and
unrelated dealers spread through the country other C
than in Uttar Pradesh. There is no dispute raised by
the Central Excise Department with regard to these
sales. Appellants’ sale price to these independent
dealers duly satisfy the requirements of Section
4(1)(a) of the Act in every respect and there is no D
dispute on this factual position. In respect of these
sales to independent dealers located other than in
U.P., appellants have paid excise duty based on their
sale price to these dealers. This factual position is
not disputed by the respondent. It was argued that
once such a wholesale price to an unrelated buyer E
satisfying the requirements of Section 4(1)(a) of the
Act is available, then that price alone should be
treated as the normal price in respect of all the sales
made by the appellants including the sales made to
related persons. In other words, where sales are F
made by the assesses to wholesale buyers who are
unrelated and also to buyers who are related, then
the price to unrelated buyers should be adopted as
the basis for payment of excise duty even in respect
of sales to related buyers. In such a situation, third
proviso to Section 4(1)(a) of the Act will not come G
into play at all. Since in the present case, normal
price to independent dealers is available, same
should be treated as the basis for arriving at the
assessable value in respect of sales to Syndet also.
H
50 SUPREME COURT REPORTS [2022] 18 S.C.R.

A ….
24-25. In this view of the matter, the argument
advanced by Mr. A Subba Rao, learned counsel
appearing for the respondent, has no merits. As a
matter of fact, the Tribunal, by its order, has not
B questioned the genuineness of the sale between the
appellants and Syndet. The appellants submitted
before the Tribunal and also before the Collector that
the depot of Syndet was existing right from 1976 and
it was not created only after the appellants started
selling the products to Syndet in 1990. The appellants,
C in support of this submissions, also filed affidavits of
dealers, transporters, employees of Syndet. The
Tribunal having accepted the sale as a genuine sale
and having accepted that price to independent
dealers is available under Section 4(1)(a) of the Act,
D the appellate Tribunal ought not to have rejected the
submission of the appellants regarding the
acceptance of price to independent dealers for sales
to Syndet also.”
32. This Court, thus, ruled that the amount charged from
E independent buyers can form the benchmark to calculate the appropriate
assessable value of the goods sold to the related parties. This approach
is of great assistance keeping in view the similarity between the facts
and issues that arose in SACI Allied Products (Supra) and in the dispute
before us.

F 33. The conclusion we reach from this is that the principles under
Section 4(1) of the CEA are geared toward determination of the ‘value’
of goods. Under Section 4(1)(a), the value of goods for the purposes of
excise duty, is deemed to be the ‘normal price’ of the goods that are
‘ordinarily sold’ in the course of business, and where the price is the
‘sole consideration’ for the transaction. It is only when this cannot be
G gleaned from the set of transactions available on record that we resort
to Section 4(1)(b).
34. The presumption under Section 4(1)(a) is that the sale from
an Assessee to an independent party is the proper valuation to be used
for determining excise duty. Conversely, a rebuttable presumption can
H
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 51
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

be drawn regarding related party transactions and the value at which A
goods are sold in such situations. Rule 9 would be sufficient to resolve
this issue when sales are made only to related entities, but where both
independent and related parties are involved, we must refer to other
means. In this context, Rule 11 obliges the Revenue to use “reasonable
means” consistent with the principles under Section 4(1) of the CEA to
B
arrive at the appropriate value. We observe that the show cause notice
and the order of the Commissioner proceed along the basis that Section
4(1)(b) is applicable as the Assessee and MIL and MSL are related
parties. Section 4(1)(a) was deemed to be inapplicable as it addresses
situations where the parties are not related.
35. The unequivocal position which emerges before us is that the C
price charged from independent parties for the sale of excisable goods
can be used as a benchmark for determination of excise duty on related
transactions when such a price is readily available. However, we add
the caveat that when making such calculations via transposition, the
Revenue cannot act in a mechanical way. The assessment of the D
appropriate value of the related party transaction must be made after
considering relevant material and due application of mind. The entire
quasi-judicial process of issuing a show cause notice and considering
the distinguishing factors placed by the Assessee must be completed
before the price of sales to independent buyers is utilized as a benchmark
for sales to related parties. The general principles of Section 4(1) of the E
CEA, read with Rule 11 of the CEVR, are meant to provide a pathway
for determination of the “normal price” and “value” of goods in cases
where no alternative methodology is applicable. This fulfils the dual
objectives of being in consonance with the Circular dated 01.07.2002
and harmonizing different provisions of the CEA and CEVR. F
36. The sum and substance of our analysis is that the assessable
value for the related party sales can be established by referring to the
normal price under Section 4(1)(a) of the CEA, which is readily available
in the present case. This is, in our opinion, the true meaning and intention
underlying the Circular of 01.07.2002. The reference to Rule 11 in Point G
No. 12 of the Circular simply mandates the usage of “reasonable means”
keeping in mind Section 4(1)(a) of the CEA and Rule 9 of the CEVR.
This is merely a method by which the Revenue is required to apply its
mind to a case of partial sales to both independent and related parties.

H
52 SUPREME COURT REPORTS [2022] 18 S.C.R.

A The conclusion reached through this process may very well be in
consonance with our analysis.
37. Regardless of the value the Revenue finally settles upon, we
do not find the Circular itself to be contrary to any statutory provisions.
To do so would essentially render Point No. 12 ineffective and such an
B outcome should, ideally, be avoided as far as possible. In fact, the
Commissioner’s order proceeds to determine the value of the sales made
by the Respondent-Assessee to its sister concerns on the basis of the
value of its sales to independent parties. In our considered view, this is
entirely consistent with the actual intent of the Circular dated 01.07.2002,
which we have already held is not in contravention with either the CEA
C or the CEVR.
38. The only remaining facet of the case is the extended period of
limitation invoked against the Respondent-Assessee under the CEA.
The justification of extending the period of limitation depends upon whether
the Respondent-Assessee has suppressed facts and failed to provide
D accurate information regarding its sales to the Revenue. To this extent,
there is a finding of fact against the Assessee. At the same time, we are
of the considered view that since the Revenue itself appeared to be
unclear on the correct method of valuation of the goods, it is not
appropriate to saddle the Respondent with additional liability, namely,
E other than the excise duty. Hence, though we confirm the demand made
by the Appellant, we do not approve the levy of interest and penalties
upon the Respondent, and direct that these amounts be reduced from
the total recoverable amount from the Assessee.
D. CONCLUSION
F 39. Having held so, we can now bring this matter to a close. For
the purposes of current dispute, it suffices for us to clarify that Point No.
12 in the Circular of 01.07.2002 is not contrary to the intent of the CEA
and CEVR and the object behind it is to merely use “reasonable means”
as outlined under Rule 11 of the CEVR, in conformity with Section 4(1)(a)
G of the CEA and Rule 9 of the CEVR, so as to reach the assessable
value of goods for determination of excise duty.
40. When the normal price that is ordinarily charged in dealings
where the price itself is the sole consideration of the transaction is
available, as it is here, that price can be transposed onto the related
party purchases as well, to arrive at the assessable value. Hence, the
H
COMMNR. OF CENTRAL EXCISE & SERVICE TAX, ROHTAK 53
v. MERINO PANEL PRODUCT LTD. [SURYA KANT, J.]

order of the Commissioner regarding the value of the goods sold to the A
Respondent’s sister concerns is in consonance with this Court’s earlier
judgments and the Circular dated 01.07.2002.
41. We allow the Civil Appeal in the abovementioned terms.
42. Pending applications, if any, are disposed of accordingly.
B
Divya Pandey Appeal disposed of.
(Assisted by : Rahul Kumar, LCRA)

C

D

E

F

G

H