Limitation and valuation of Rule 6(3)(b) reversal upheld for exempted clearances, with transportation cost excluded from computation.

Demand for reversal of 8% under Rule 6(3)(b) was held time-barred because the department already knew the clearances of exempted goods, the reversal practice was disclosed, and no allegation of intent to evade duty was established, so the extended limitation period could not be invoked. The quantification was also upheld: the 8% amount was linked to the contract sale value of the bare pipes, and transportation cost was excluded from the reversal computation. On both limitation and merits, the demand and penalty were set aside and the appeal failed.

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Issues: (i) Whether the demand for reversal of 8% under Rule 6(3)(b) was barred by limitation. (ii) Whether the 8% amount had been correctly quantified by excluding or including sale value components and transportation cost.

Issue (i): Whether the demand for reversal of 8% under Rule 6(3)(b) was barred by limitation.

Analysis: The demand was examined in the context of the department's knowledge of the clearances of exempted goods, the reversal practice adopted by the respondent, and the absence of any allegation establishing intent to evade duty. The findings recorded that the relevant facts were within the department's knowledge and that the extended period was not invocable.

Conclusion: The demand was time-barred and could not be sustained.

Issue (ii): Whether the 8% amount had been correctly quantified by excluding or including sale value components and transportation cost.

Analysis: The valuation dispute turned on whether the amount collected at 8% could be treated as part of the sale price and whether freight up to the job worker's premises formed part of the value for working out the reversal. The findings accepted the contract price adopted for the bare pipes, held that the 8% paid was with reference to that sale value, and rejected inclusion of transportation cost for the reversal computation.

Conclusion: The quantification adopted by the respondent was upheld and no additional reversal was payable on that basis.

Final Conclusion: The appeal failed on both limitation and merits, and the order setting aside the demand and penalty was sustained.

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