Price is the sole consideration :

The price should be the “sole consideration for sale‟. Any other consideration in cash or in kind which forms part of the transaction has to be converted in monetary terms and added back to the price. Each such transaction has to be at arm‘s length and on principal to principal basis. If the transaction is not on principal to principal basis, the charges paid are to be added to the transaction value of the goods.

When the sale is at arm‘s length, sale price of subsequent seller is not relevant and does not matter that dealings were confined only to two buyers – Atic Inds. Ltd. v. H.H. Dave, Asst. Collector 1978 (2) E.L.T. (J444) (S.C)

Relationship between manufacturer & sole distributor though a special one is not a proof by itself to show that price is favourable price – UOI v. Hind Lamps Ltd. 1981 (8) E.L.T. 11 (Del.)