In Brief
Merino Panel Products Ltd manufactured decorative laminates and sold them to both independent buyers and related parties (Merino Industries Ltd and Merino Services Ltd) at different prices. The Revenue issued a show cause notice demanding additional excise duty, claiming the related party sales were undervalued. The Tribunal set aside the notice, arguing the Revenue used an incorrect valuation method contrary to its own Circular. The Supreme Court allowed the Revenue's appeal, holding that the normal price charged to independent buyers can be transposed to related party sales to determine assessable value. The Court confirmed the CBEC Circular is binding on the Revenue but upheld the substantive valuation approach, excluding interest and penalties since the Revenue itself was unclear on correct methodology.
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