On merits, the CUP method is the ‘most appropriate method’ to determine the arm’s length price in the cases of generic drug manufacturers so long as comparables are available. As the API imported by the assessee was a generic drug and not patent protected, the CUP method could be used. The argument that the APIs are “unique” on the ground that they are better, of proven effectiveness and manufactured using WHO – GMP practices is not acceptable because while the high quality standards does confer a certain degree of comfort, it does not affect the comparability of the API with the same API manufactured by competitors. (Principles laid down in Glaxo Smith Kline Inc Vs Her Majesty (2008 TCC 324) approved on this point by the Canadian Court of Appeal in 2010 FCA 201, followed – Noted that it was not the argument that the higher prices of API were warranted on account of commercial compulsions arising out of licensing agreement)