Job-work excise valuation can track depot sale value, and non-disclosure may trigger extended limitation.

Goods manufactured on job work basis and cleared to a trader's depots may be valued under Rule 7 by reference to the depot sale transaction value, rather than by cost construction alone, where the goods are subsequently sold at market prices. The fact that the depots belong to the trader does not take the transaction outside Rule 7. The text also explains that suppression of the actual depot sale prices, despite filing returns on an incorrect valuation basis, can justify invocation of the extended limitation period under Section 11A; such returns do not amount to full and true disclosure.

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Issues: (i) Whether the assessable value of goods manufactured on job work basis was to be determined by the cost construction method or by reference to the depot sale price of the trader under Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000; (ii) Whether the show-cause notice was barred by limitation under Section 11A of the Central Excise Act, 1944.

Issue (i): Whether the assessable value of goods manufactured on job work basis was to be determined by the cost construction method or by reference to the depot sale price of the trader under Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.

Analysis: The Court held that the decision in Ujagar Prints did not govern the case in the manner suggested by the petitioner and had to be read in the context of Rule 7. Since the manufactured goods were cleared from the factory and transferred to the trader's depots, where they were subsequently sold at market prices, the valuation could legitimately be linked to the normal transaction value realised from such depot sales. The fact that the depots belonged to the trader and not to the petitioner did not take the transaction outside Rule 7.

Conclusion: The assessable value was correctly referable to the depot sale price, and the petitioner's challenge on valuation failed.

Issue (ii): Whether the show-cause notice was barred by limitation under Section 11A of the Central Excise Act, 1944.

Analysis: The Court found that the extended period was invokable because the petitioner and the trader did not disclose the actual sale prices realised from the depots, despite the difference between the declared value and the sale value. Filing periodical returns on an incorrect valuation basis did not amount to full and true disclosure of material facts. The representation made shortly before issuance of the notice did not alter the position.

Conclusion: The notice was not time-barred and the plea of limitation was rejected.

Final Conclusion: The writ petition was found to be without merit, and the impugned show-cause notice was upheld as legal and valid.

Ratio Decidendi: Where excisable goods manufactured on behalf of another are cleared to the trader's depots and sold thereafter, valuation may be determined on the basis of the depot sale transaction value under the valuation rules, and non-disclosure of those sale prices can justify invocation of the extended limitation period.

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