Related-person valuation requires more than common management; revenue neutrality and departmental knowledge defeated duty demand and extended limitation.

Separate corporate entities are not treated as related persons for Central Excise valuation solely because they operate under common management. The proposed related-person valuation was also revenue-neutral because duty paid by the supplying unit would be available as input credit to the receiving unit, making the consequential demand unsustainable. Extended limitation cannot be invoked where the Department already knew the units' ownership, management and activities through registrations, returns and visits, and suppression with intent to evade duty is not established. The demand, interest and penalty based on those grounds could not be sustained.

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Issues: (i) Whether clearances between the appellant and its sister concern attracted related-person valuation under the Central Excise valuation rules; (ii) Whether the extended period of limitation could validly be invoked for the alleged undervaluation.

Issue (i): Whether clearances between the appellant and its sister concern attracted related-person valuation under the Central Excise valuation rules.

Analysis: The two entities were separate companies and could not be treated as related persons merely because they were under the same management. In any event, valuation by the Revenue's proposed method would result in revenue neutrality because duty paid by the supplying unit would be available as input credit to the receiving unit.

Conclusion: The related-person valuation basis and consequential demand were unsustainable, in favour of the assessee.

Issue (ii): Whether the extended period of limitation could validly be invoked for the alleged undervaluation.

Analysis: The Department was aware of the units, their ownership and management, and their activities through registration particulars, returns and departmental visits. The requisite suppression or intent to evade duty for invoking the extended limitation period was therefore absent.

Conclusion: Invocation of the extended period of limitation was unsustainable, in favour of the assessee.

Final Conclusion: The demand, interest and penalty founded on related-person valuation and the extended limitation period could not be sustained.

Ratio Decidendi: Separate corporate entities do not become related persons solely because of common management, and extended limitation is unavailable where the material facts were within the Department's knowledge and suppression with intent to evade duty is not established.

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