Free-supply valuation and limitation: disclosed principal-to-principal transaction barred inclusion of waste filter cake value and defeated extended limitation.

In a disclosed principal-to-principal valuation arrangement, the free supply of waste filter cake by the buyer was not added to the assessable value of calcium petroleum sulphonate because the material had been treated as non-excisable and the declared price was accepted as the normal price. The demand was also held time-barred because the assessee had disclosed the relevant facts through declarations and correspondence, so suppression with intent to evade duty was not established and the extended limitation period was unavailable. The order under challenge was sustained and the revenue's case failed.

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Issues: (i) Whether the value of waste filter cake supplied free of cost by the buyer was includible in the assessable value of calcium petroleum sulphonate manufactured by the assessee; (ii) Whether the demand was barred by limitation in the absence of suppression of facts with intent to evade duty.

Issue (i): Whether the value of waste filter cake supplied free of cost by the buyer was includible in the assessable value of calcium petroleum sulphonate manufactured by the assessee.

Analysis: The transaction was found to be on principal-to-principal basis. The waste filter cake had been treated as non-excisable in earlier proceedings, and the assessee had disclosed the receipt of the material free of cost along with the manufacturing arrangement. The declared price was accepted as the normal price under the valuation provision, and the free supply of waste filter cake did not justify addition to assessable value.

Conclusion: The value of the waste filter cake was not includible in the assessable value.

Issue (ii): Whether the demand was barred by limitation in the absence of suppression of facts with intent to evade duty.

Analysis: The record showed disclosure of the relevant facts to the department through declarations and correspondence. On that basis, the authority below held that there was no suppression with intent to evade duty, and the extended period was not available.

Conclusion: The demand was time-barred.

Final Conclusion: The order under appeal was sustained and the revenue challenge failed in full.

Ratio Decidendi: Where the disputed input or raw material is supplied free of cost in a disclosed principal-to-principal transaction, and the material is not otherwise exigible as part of the manufactured product's value, it cannot be mechanically added to assessable value; in the absence of suppression, the extended limitation period is unavailable.

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