Retained sales tax forms part of excise value, but extended limitation fails without suppression or deliberate misstatement.

Amounts of sales tax collected from buyers and retained without remittance to the State exchequer are includible in the assessable value for central excise duty under the transaction value principle. However, where the valuation issue was legally unclear and there was no deliberate suppression by the assessee, the extended period of limitation could not be invoked. The demand could survive only within the normal limitation period, and liability beyond that period was not sustainable. The ratio confirms both the inclusion of retained sales tax in excise valuation and the restriction on extended limitation absent culpable conduct.

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Issues: (i) Whether sales tax collected and retained by the assessee was includible in the assessable value for levy of central excise duty. (ii) Whether the demand was barred by limitation and the extended period could be invoked.

Issue (i): Whether sales tax collected and retained by the assessee was includible in the assessable value for levy of central excise duty.

Analysis: The dispute concerned sales tax incentive amounts collected from buyers and retained by the assessee without remittance to the State exchequer. The legal position on excise valuation under the transaction value concept, as applied by the Supreme Court, is that amounts retained by the assessee and not actually paid to the Sales Tax Department do not qualify for exclusion from assessable value.

Conclusion: The amount of sales tax retained by the assessee was includible in the assessable value, and this issue was decided against the assessee.

Issue (ii): Whether the demand was barred by limitation and the extended period could be invoked.

Analysis: The Tribunal accepted the circular issued by the Board and the reasoning that the valuation controversy had lacked clarity, so the assessee could not be treated as having deliberately suppressed facts for invoking the extended limitation period. The demand could therefore survive only within the normal limitation period.

Conclusion: The assessee was entitled to the benefit of limitation, and the extended period was not available.

Final Conclusion: Although the valuation issue was decided against the assessee, the demand could not be sustained beyond the normal period of limitation, so the impugned order was set aside and the appeal succeeded.

Ratio Decidendi: Amounts of sales tax retained by the assessee and not paid to the State exchequer are includible in excise assessable value, but where the issue was legally unclear, the extended period of limitation cannot be invoked absent suppression or fault attributable to the assessee.

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