Comparable-goods valuation requires materially similar products; generic PCB assemblies could not be valued against customised PCBs, and limitation failed.

Generic PCB assemblies cleared to depots could not be valued on the basis of customised PCBs sold ex-factory because the two were not materially identical: the customised goods required additional processing and were ready for fitment, while the depot clearances were generic and needed further work. The comparable-goods method therefore failed for want of proper similarity and adjustment. The extended period of limitation was also unavailable because clearances were made under approved central excise documents, the department knew the relevant facts, and there was no proof of suppression with intent to evade duty. The demand was unsustainable on both valuation and limitation grounds.

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Issues: (i) Whether generic PCB assemblies cleared to depots could be valued on the basis of the price of customised PCBs sold ex-factory as comparable goods under the valuation rules; (ii) Whether the demand was barred by limitation for want of suppression of facts with intent to evade duty.

Issue (i): Whether generic PCB assemblies cleared to depots could be valued on the basis of the price of customised PCBs sold ex-factory as comparable goods under the valuation rules.

Analysis: The material showed that generic PCBs and customised PCBs were not identical goods. Customisation required several additional processes and there was also the possibility of failure during such processing. The goods sold ex-factory were ready for fitment as replacement parts, whereas the goods cleared to depots were generic in character and required further work before use. In these circumstances, the price of customised PCBs could not be adopted as the basis for valuing the generic PCBs, and no adequate adjustment for the difference in characteristics was shown to have been made.

Conclusion: The valuation based on the price of customised PCBs was not sustainable and the issue was decided in favour of the assessee.

Issue (ii): Whether the demand was barred by limitation for want of suppression of facts with intent to evade duty.

Analysis: The clearances were made under approved central excise documents, and the department was aware of the relevant facts. There was no material showing suppression of facts by the assessee with intent to evade duty. In the absence of such suppression, the extended period of limitation could not be invoked.

Conclusion: The extended period under the proviso to Section 11A was unavailable and the issue was decided in favour of the assessee.

Final Conclusion: The demand could not be sustained either on valuation or on limitation, and the appeal succeeded with consequential relief.

Ratio Decidendi: For valuation under the comparable-goods method, goods can be compared only if they are materially similar, and the extended limitation period cannot be invoked without proof of suppression of facts with intent to evade duty.

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