Valuation of alleged Clandestinely removed Goods b/w related buyers cannot be based on Transaction Value b/w Unrelated Buyers: CESTAT

CESTAT ruled that valuation of allegedly clandestinely removed goods between related parties cannot be based on unrelated party transactions without adjustments. The tribunal set aside a ₹12 crore demand where the department applied unrelated buyer prices without considering legitimate business differences. The case involved pharmaceutical intermediates sold to group companies at lower rates due to long-term contracts and bulk discounts. CESTAT emphasized that Rule 8 of Central Excise Valuation Rules requires proper comparison of like-with-like transactions. The matter was remanded for fresh determination using appropriate comparable data. This decision provides relief to manufacturers facing arbitrary valuations in related party scenarios. Tax authorities must now conduct proper economic analysis rather than mechanical application of highest available prices when alleging undervaluation.