CAS-4 valuation of captive goods and extended limitation require clear factual basis before demand can be enlarged.

Captively transferred goods valued on a CAS-4 cost basis require factual verification of whether the cost certificates relate to the relevant manufacturing period; where that linkage is not conclusively established, the valuation issue must be remanded for fresh examination and de novo adjudication. The extended period of limitation cannot be invoked without a clear foundation for wilful suppression, and where the assessee's declared valuation method for captive consumption was within departmental knowledge, the demand is confined to the normal period. The matter was therefore remitted on valuation, and the demand was restricted accordingly.

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Issues: (i) whether the assessable value of captively transferred goods required verification with reference to CAS-4 cost certificates for the relevant period; (ii) whether invocation of the extended period of limitation was sustainable.

Issue (i): whether the assessable value of captively transferred goods required verification with reference to CAS-4 cost certificates for the relevant period

Analysis: The dispute turned on whether the cost certificates produced by the assessee pertained to the relevant period of manufacture or were based on prior periods, as alleged by the Revenue. Since the factual correctness of the certificates and their linkage to the period in question had not been conclusively verified, further scrutiny was necessary before the valuation issue could be finally determined. The proper course was to have the adjudicating authority examine the certificates and the assessee's explanation and then determine valuation in accordance with law.

Conclusion: The valuation issue was remanded for fresh verification and de novo adjudication.

Issue (ii): whether invocation of the extended period of limitation was sustainable

Analysis: The show cause notice did not contain a clear foundation for alleging wilful suppression in relation to the costing method adopted. The facts showed that the goods were captively consumed and duty was paid on the assessee's declared valuation method, which was within the knowledge of the Department. In these circumstances, the demand could not travel beyond the normal period.

Conclusion: Invocation of the extended period was not sustainable and the demand was confined to the normal period.

Final Conclusion: The impugned order was set aside, the matter was remitted for fresh adjudication on valuation, and the demand was restricted to the normal period alone.

Ratio Decidendi: Where the correctness of CAS-4-based cost statements is not conclusively verified, the valuation dispute must be remitted for factual determination, and the extended period cannot be invoked without a clear allegation and basis of wilful suppression.

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