Revenue-neutral valuation disputes cannot justify extended limitation when demand rests only on a change of opinion.

In a wholly revenue-neutral clearance of goods to a sister unit, CESTAT held that the extended period of limitation could not be invoked where the demand rested only on a revised view of valuation under Rule 8. The corrigendum substantially enlarging the proposed demand was treated as the effective show cause notice, but the record did not support suppression or any other basis for extended limitation. The later amendment to Rule 8, which expressly dealt with partly captive consumption and partly sale, reinforced that the earlier demand could not stand on the same footing. The appeals were allowed, the impugned order was set aside, and consequential relief followed.

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Issues: Whether the show cause notice, as enlarged by corrigendum, could sustain invocation of the extended period of limitation in a case where the assessee's clearances to its sister unit created a wholly revenue-neutral situation and the demand was based on a change of opinion regarding valuation under Rule 8.

Analysis: The assessee's unit cleared most of its production to another unit of the same establishment, and any duty paid at the first unit would be available as Cenvat credit at the receiving unit, making the situation wholly revenue neutral. The corrigendum substantially enhanced the proposed demand and was treated as the effective show cause notice. The demand proceeded only on the Revenue's revised view of cost of production, and the record did not justify invocation of the extended limitation period on that basis. The later amendment to Rule 8, which expressly addressed partly captive consumption and partly sale, also reinforced that the earlier demand could not be sustained on the same footing.

Conclusion: The extended period of limitation was not invocable, and the demand based on the show cause notice and corrigendum was unsustainable.

Final Conclusion: All appeals were allowed and the impugned order was set aside with consequential relief.

Ratio Decidendi: Where a duty demand arises in a wholly revenue-neutral situation and is founded only on a change of opinion as to valuation, the extended period of limitation cannot be invoked.

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