Common-control pricing and limitation: independent buyer prices upheld, but extended period denied absent fresh suppression.

Where the assessee and buyer are under common control and the dealings are not at arm's length, the price charged to independent buyers may be treated as relevant for clearances to the related buyer, and acceptance of that basis was upheld. On limitation, the article notes that the extended period cannot be invoked merely on the same investigation material where price lists and returns were filed and no fresh suppression or misstatement is shown; the demand was therefore treated as time-barred. The result described is that the Revenue's challenge failed and the order dropping the demand was affirmed.

---

---

Issues: (i) whether the transactions between the assessee and the buyer were not at arm's length and the price charged to independent buyers could be adopted for clearances to the buyer; (ii) whether the show cause notice was barred by limitation and the extended period could be invoked on the alleged suppression of correct cost of production.

Issue (i): whether the transactions between the assessee and the buyer were not at arm's length and the price charged to independent buyers could be adopted for clearances to the buyer;

Analysis: The assessee and the buyer were found to be under common control and the dealings were not transparent. On the facts, the relationship influenced the transactions. The price at which the assessee sold goods to independent buyers was therefore held to be relevant for the clearances to the buyer, and the adjudicating authority's approach in accepting that price was found justified.

Conclusion: The adoption of the price charged to independent buyers for clearances to the buyer was upheld.

Issue (ii): whether the show cause notice was barred by limitation and the extended period could be invoked on the alleged suppression of correct cost of production.

Analysis: The record showed that the assessee had filed price lists and returns and that an earlier notice arising from the same investigation had already been held to be time-barred. In the absence of any justifiable basis to allege suppression or misstatement for a second notice founded on the same material, the extended period could not be invoked.

Conclusion: The demand was held to be barred by limitation and the extended period was not available.

Final Conclusion: The Revenue's challenge failed, and the order dropping the demand was affirmed in full.

Ratio Decidendi: Where the assessee and buyer are found to be under common control and the transaction is not at arm's length, and where the department seeks to invoke the extended period on the same facts already investigated without proving fresh suppression or misstatement, the independent buyers' price may be accepted but the demand cannot be sustained beyond limitation.

---