Suppression of valuation basis justifies extended limitation and sustains interest and penalty in captive-consumption clearances.

Deliberate suppression of the true valuation basis by under-valuing captive-consumption clearances attracts the extended period of limitation where the assessee's declarations, returns and invoices fail to disclose the differential pricing structure. The record showed a conscious reduction in the captive-consumption price through an internal resolution, rather than any bona fide distinction based on strength, market conditions or stock position, supporting intent to evade duty. As the duty demand on merits was not challenged, the confirmed demand stood, and the consequential levy of interest and penalty was also maintained.

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Issues: Whether the duty demand was barred by limitation in view of the assessee's conduct, and whether the levy of interest and penalty was sustainable.

Analysis: The price declarations, RT-12 returns and invoices did not disclose that the rectified spirit cleared for captive consumption was valued differently from the goods cleared for home consumption. The record showed a conscious reduction of the captive-consumption price through the internal resolution, not any bona fide difference based on strength, market condition or stock position. The material was sufficient to show suppression of the true price structure with intent to evade duty, taking the case out of limitation. Since the demand on merits was not challenged, the confirmed duty survived, and the consequence of interest and penalty also followed.

Conclusion: The demand was held to be within limitation, and the levy of interest and penalty was sustained against the assessee.

Ratio Decidendi: Where the assessee suppresses the true basis of valuation by deliberate under-valuation with intent to evade duty, the extended period of limitation applies and consequential interest and penalty are maintainable.

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