Excise valuation cannot rest on a single abnormal sale, and limitation fails without suppression of facts.

Excise valuation for clearances to another unit could not be fixed on the basis of one isolated retail sale made in special circumstances, because a stray transaction did not represent the normal price for the longer period in dispute; the department had to adopt the proper statutory valuation basis, and its valuation method failed on merits. The duty demand was also time barred because the assessee had disclosed the relevant clearance and price details and explained the price difference, so suppression of facts was not established and the extended limitation period could not be invoked. The assessee therefore succeeded on both valuation and limitation.

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Issues: (i) Whether the assessable value of goods cleared to another unit could be fixed on the basis of a solitary retail sale made in special circumstances; (ii) Whether the duty demand was barred by limitation in the absence of suppression of facts.

Issue (i): Whether the assessable value of goods cleared to another unit could be fixed on the basis of a solitary retail sale made in special circumstances.

Analysis: The demand for a four-year period was founded on one isolated sale at a higher price. Such a solitary retail sale, made in special circumstances and not reflecting the normal pattern of clearance, could not be treated as the normal price for the entire period. Valuation for excise purposes had therefore to be determined on the proper statutory basis and not by elevating one stray transaction into the universal sale price.

Conclusion: The issue was decided in favour of the assessee. The valuation adopted by the department was not sustainable on merits.

Issue (ii): Whether the duty demand was barred by limitation in the absence of suppression of facts.

Analysis: The assessee had disclosed the relevant clearance and price particulars in the return and had also explained the price difference in correspondence with the department. In these circumstances, the department could not invoke suppression of facts to sustain a delayed notice issued after several years. The record showed awareness of the transaction long before the notice, defeating the plea for extended limitation.

Conclusion: The issue was decided in favour of the assessee. The demand was time barred.

Final Conclusion: The appeal succeeded because the valuation adopted by the department was unsustainable and the demand was also barred by limitation.

Ratio Decidendi: A solitary sale in special circumstances cannot be treated as the normal price for excise valuation of all clearances over a longer period, and where the relevant facts are disclosed to the department, the extended period of limitation cannot be invoked for want of suppression.

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