Actual tax payable governs valuation, and blanket deduction at a higher tariff rate is impermissible under the valuation scheme.

For valuation under section 4(4)(d)(ii), only the actual turnover tax or duty payable under the applicable exemption or concessional notification can be excluded from assessable value; a blanket deduction at the higher tariff rate is impermissible. The Court treated the word "payable" as referring to the real tax liability at the time of removal, so the assessee had to apply the reduced rate where applicable and could not claim a notional 2% deduction. On limitation, once the Department was informed of the two categories of sales, suppression could not be alleged thereafter, and the demand beyond the normal period was time-barred.

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Issues: (i) Whether, for valuation under section 4(4)(d)(ii), the assessee could deduct turnover tax at the full tariff rate of 2% despite the applicable concessional rate of 0.5% for part of the sales. (ii) Whether the demand was barred by limitation in the absence of suppression after the Department acquired knowledge of the two types of sales.

Issue (i): Whether, for valuation under section 4(4)(d)(ii), the assessee could deduct turnover tax at the full tariff rate of 2% despite the applicable concessional rate of 0.5% for part of the sales.

Analysis: The expression "payable" in section 4(4)(d)(ii) was construed in context to mean the actual tax liability referable to the applicable exemption position at the time of removal. The statutory scheme permits exclusion only of the effective duty or tax actually payable, not a notional higher rate. Since the assessee knew of the Gujarat notification and the existence of backward area and normal area sales, it was required to work out the correct deduction on the basis of the reduced rate where applicable. Claiming a blanket deduction at 2% concealed the true assessable value.

Conclusion: The deduction was confined to the actual payable turnover tax and the demand on merits was upheld, in favour of Revenue.

Issue (ii): Whether the demand was barred by limitation in the absence of suppression after the Department acquired knowledge of the two types of sales.

Analysis: The Tribunal had found that once the assessee informed the Department by letter dated 14.1.1997 about the two categories of sales, suppression could not be alleged thereafter. That finding was treated as a factual conclusion on the question of knowledge and suppression, and no reason was found to disturb it.

Conclusion: The demand beyond the normal period was held to be time-barred, in favour of the assessee.

Final Conclusion: The demand was sustained on valuation, but the limitation objection succeeded to the extent recorded by the Tribunal, resulting in dismissal of both sets of appeals.

Ratio Decidendi: For valuation under section 4(4)(d)(ii), only the actual tax or duty payable after applying the relevant exemption or concessional notification can be excluded from assessable value, and a blanket deduction at the higher tariff rate is impermissible.

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