Approved ex-factory valuation prevails for depot sales absent proof of extra consideration or flow back, and limitation bars the demand.

An approved ex-factory price under Section 4(1)(a) was treated as the proper basis for valuation, and depot sales could not be revalued merely because most clearances moved through depots or because depot prices were higher. The Revenue had to show that the declared price was not the sole consideration or that there was any flow back of money; in the absence of such evidence, and with cost verification substantially supporting the declared value, a cost-based valuation could not be substituted. The duty demand also failed on limitation, as the same notice and valuation issue had already been held time-barred in earlier proceedings and that view had been affirmed by the Supreme Court.

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Issues: (i) Whether the ex-factory price declared by the assessee could be rejected for depot sales on the ground that most clearances were through depots and the depot price was higher; (ii) whether the demand of duty on the impugned valuation issue could survive in view of the facts and the plea of limitation.

Issue (i): Whether the ex-factory price declared by the assessee could be rejected for depot sales on the ground that most clearances were through depots and the depot price was higher.

Analysis: The availability of an approved factory gate price under Section 4(1)(a) was treated as the proper basis for valuation. The Revenue failed to establish that the declared price was not the sole consideration or that there was any flow back of money. Mere comparison with depot prices, or reliance on private costing based on imported timber, was held insufficient to displace the ex-factory price. The valuation under the cost method could not be invoked when the normal factory gate price was available, and the Revenue's own cost verification substantially supported the declared value.

Conclusion: The ex-factory price was rightly applied to depot sales, and the undervaluation allegation failed.

Issue (ii): Whether the demand of duty on the impugned valuation issue could survive in view of the facts and the plea of limitation.

Analysis: The earlier decision concerning the same order and same notice had already accepted the assessee's valuation position and held the related demands to be barred by limitation, and that view had been affirmed by the Supreme Court. The same reasoning was treated as applicable to the present appeals as well.

Conclusion: The demand was unsustainable also on limitation.

Final Conclusion: The Revenue failed to establish grounds for disturbing the Commissioner's acceptance of the factory gate price, and the appeals were not maintainable on the valuation issue or on limitation.

Ratio Decidendi: Where an approved ex-factory price is available and there is no evidence of additional consideration or flow back, depot sales cannot be revalued on a cost-based or higher depot-price basis under the valuation rules.

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