Interim adhoc price governs excise valuation where regulator has not fixed final lignite tariff; extended limitation failed

Where lignite supply price remained subject to final determination by the regulator, the interim adhoc price actually realised was treated as the transaction value for excise valuation, not the higher petitioned price. The document states that transaction value under the excise scheme is the price actually paid or payable, and an unapproved petitioned figure cannot replace the operative interim price. It also notes that, because the assessee disclosed the relevant facts and there was no suppression or intent to evade duty, the extended limitation period and consequential penalty were not justified.

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Issues: (i) Whether the transaction value of lignite was to be determined on the basis of the petitioned price or the interim adhoc price fixed pending final determination by the statutory regulator. (ii) Whether invocation of the extended period of limitation and the consequential penalty were justified.

Issue (i): Whether the transaction value of lignite was to be determined on the basis of the petitioned price or the interim adhoc price fixed pending final determination by the statutory regulator.

Analysis: The price of lignite supplied by the appellant was subject to annual determination by the regulatory authority and the final tariff had not been fixed for the relevant years. The interim orders showed that only adhoc prices were actually operative during supply, while the petitioned price had not been accepted as the recoverable price. In the statutory scheme governing excise valuation, transaction value means the price actually paid or payable for the goods. Since the amount actually realised was only the interim adhoc price and the higher petitioned price had not been approved, the petitioned figure could not be treated as the price actually payable.

Conclusion: The adhoc/interim price was the correct transaction value and the petitioned price was not the assessable value.

Issue (ii): Whether invocation of the extended period of limitation and the consequential penalty were justified.

Analysis: The appellant had disclosed all relevant facts to the Department and had sought provisional assessment because final tariff fixation was still pending. Duty was being discharged on the interim value, there was no finalized higher value available, and no material showed suppression of facts or intent to evade duty. In these circumstances, the show cause notice was premature and the conditions for applying the extended limitation period were not made out. As the demand itself could not survive on that basis, the penalty also lacked foundation.

Conclusion: Invocation of the extended period and imposition of penalty were not justified.

Final Conclusion: The duty demand based on the petitioned price could not be sustained, and the appellant's valuation on the interim adhoc price was accepted as correct.

Ratio Decidendi: Where the supply price is subject to determination by a statutory authority and the final price is still pending, the value actually realised on an interim basis is the transaction value for excise purposes, and extended limitation cannot be invoked absent suppression or intent to evade duty.

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