Duty valuation must account for all clearances, with excess duty adjusted against short payment before any demand is confirmed.

Duty liability in depot clearance valuation had to be computed on the basis of all clearances taken together, and not by isolating only higher-value sales while ignoring transactions on which higher duty had already been paid. Excess duty paid on some clearances had to be neutralised against any short payment on others, so the demand could not stand without recomputation on complete clearance data. As the computation required fresh examination, limitation also had to be reconsidered by the adjudicating authority. The order confirming duty, penalty and interest was set aside and the matter was remanded for fresh adjudication.

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Issues: (i) Whether duty demand could be sustained by considering only depot clearances sold at higher value without accounting for clearances on which higher duty had already been paid; (ii) Whether the matter required reconsideration on limitation.

Issue (i): Whether duty demand could be sustained by considering only depot clearances sold at higher value without accounting for clearances on which higher duty had already been paid.

Analysis: The duty liability had to be worked out on the basis of the entire clearances and not by selecting only those transactions where goods were sold at a higher value from the depots. Excess duty paid on some clearances could not be ignored while computing any alleged short payment on other clearances. The assessee was entitled to neutralisation of excess payment against short payment, and the demand had to be examined on that basis.

Conclusion: The issue was decided in favour of the assessee, and the impugned demand could not stand without recomputation on the basis of all clearances.

Issue (ii): Whether the matter required reconsideration on limitation.

Analysis: Since the duty computation itself required fresh examination after taking the complete set of clearances into account, the aspect of limitation also required reconsideration by the adjudicating authority.

Conclusion: The matter was remanded for fresh consideration of limitation as well.

Final Conclusion: The order confirming duty, penalty and interest was set aside and the matter was sent back for fresh adjudication on the basis of complete clearance data and limitation.

Ratio Decidendi: In duty valuation disputes, excess duty paid on some clearances must be adjusted against short payment on other clearances, and liability cannot be determined by isolating only higher-value sales.

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