Depot sales outside exemption must be valued under normal excise rules, with extended limitation and penalty for suppression.

Depot clearances not covered by Notification No. 120/75 were required to be valued independently under Section 4(1)(a) of the Central Excise Act, with assessable value based on the depot selling price after permissible deductions for sales tax, insurance and transport charges. Suppression was established because the assessee did not file the required price lists and continued clearances on an incorrect duty basis despite departmental notice, so the extended limitation period was available and the show cause notice was not time-barred. The record also supported imposition of penalty under Rule 173Q for the incorrect duty payment and non-disclosure.

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Issues: (i) Whether goods transferred to depots and sold there were outside the benefit of Notification No. 120/75 and had to be assessed on the basis of Section 4(1)(a) of the Central Excise Act, 1944; (ii) Whether the show cause notice was barred by limitation in view of suppression of material facts and the Department's awareness of the relevant particulars; (iii) Whether the penalty imposed under Rule 173Q of the Central Excise Rules, 1944 was justified.

Issue (i): Whether goods transferred to depots and sold there were outside the benefit of Notification No. 120/75 and had to be assessed on the basis of Section 4(1)(a) of the Central Excise Act, 1944.

Analysis: The benefit of the notification was accepted as unavailable for depot clearances. Once factory gate sales enjoyed exemption under the notification, the depot sales, which were not covered by it, had to be valued independently under Section 4(1)(a). The assessable value was therefore to be based on the depot selling price, with permissible deductions for sales tax, insurance and transport charges.

Conclusion: The assessable value for depot sales was correctly determined under Section 4(1)(a), and the differential duty demand was sustainable.

Issue (ii): Whether the show cause notice was barred by limitation in view of suppression of material facts and the Department's awareness of the relevant particulars.

Analysis: The assessee failed to file the required price lists and continued clearances on an incorrect duty basis even after being alerted by the Department. The relevant particulars were furnished only in stages, and the Department required time to verify them. On these facts, suppression with intent to evade duty was established, and the notice issued within the period considered reasonable in the circumstances could not be treated as time-barred.

Conclusion: The extended period was rightly invoked and the show cause notice was not barred by limitation.

Issue (iii): Whether the penalty imposed under Rule 173Q of the Central Excise Rules, 1944 was justified.

Analysis: In view of the suppression and the incorrect duty payment on depot clearances, the imposition and quantification of penalty were supported by the record.

Conclusion: The penalty was justified.

Final Conclusion: The demand of differential duty, invocation of the extended period, and the penalty all stood affirmed, leaving no relief for the appellant.

Ratio Decidendi: Where depot sales are not covered by the exemption notification, their assessable value must be determined under the normal valuation provision, and deliberate non-disclosure of relevant clearance particulars can sustain invocation of the extended limitation period and penalty.

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