Extended limitation and excise valuation deductions fail where invoiced clearances, bank payments, and contractual allowances are established.

Extended limitation under excise law could not be invoked where clearances were made under proper invoices, payments moved through account payee cheques, and no material showed suppression, misstatement, or clandestine removal. The valuation dispute turned on whether contractual and evidential deductions could be excluded from assessable value; cash discount, pro rata recovery, trading turnover, freight, and sales tax-related deductions were treated as allowable where supported by purchase orders, invoices, and payment records. The document concludes that duty, interest, and penalty based on the disallowed amounts were not sustainable, and that valuation must reflect actual consideration after permissible deductions.

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Issues: (i) Whether the demand could be sustained by invoking the extended period of limitation on the basis of alleged suppression and clandestine removal; (ii) whether the assessee was entitled to deductions from assessable value towards pro rata recovery, cash discount, trading turnover, freight and sales tax for valuation under excise law.

Issue (i): Whether the demand could be sustained by invoking the extended period of limitation on the basis of alleged suppression and clandestine removal.

Analysis: The clearances were made under proper invoices and payments were received through account payee cheques. The sales were to a Government undertaking, and there was no allegation or evidence that goods were removed without invoicing. In the absence of material showing suppression or misstatement, the extraordinary limitation period could not be applied.

Conclusion: The invocation of the extended period of limitation was not justified and the demand could not be sustained on that basis.

Issue (ii): Whether the assessee was entitled to deductions from assessable value towards pro rata recovery, cash discount, trading turnover, freight and sales tax for valuation under excise law.

Analysis: The purchase orders and letter of intent provided for prompt payment discount and other contractual deductions. The assessee produced invoice-wise and payment-wise details showing that cash discount was actually passed on, and the pro rata recovery was supported by the contractual terms though adjusted in lump sum form. The evidence also supported the claim that part of the turnover related to trading activity and that freight and VAT-related deductions were allowable in determining the transaction value. The valuation had to be made on the actual consideration received after permissible deductions.

Conclusion: The claimed deductions were allowable, and the confirmation of duty, interest and penalty on the disallowed amounts was unsustainable.

Final Conclusion: The demand and penalty failed both on limitation and on merits of valuation, and the assessee was entitled to relief on the disputed deductions.

Ratio Decidendi: Where clearances are fully invoiced and paid through banking channels, extended limitation cannot be invoked without evidence of suppression, and valuation must exclude contractually and evidentially established permissible deductions from the actual consideration.

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