Small-scale exemption valuation under Section 4 supported extended limitation and penalty where correct clearance values were suppressed.

For small-scale exemption under Notification No. 175/86-C.E., the exemption limit had to be computed on value determined under Section 4, including the assessable value of job-work goods and not merely the job charges shown in invoices. The majority held that the department was not required to compile the assessee's progressive clearance value, and that RT 12 returns showing clearance figures under incorrect headings with the Section 4 column left nil supported suppression of the correct value. On that basis, the extended period of limitation was available and the penalty was sustainable; the demand was not time-barred.

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Issues: Whether the show cause notice demanding differential duty was barred by limitation, and whether penalty was sustainable.

Analysis: The appellants had availed the small-scale exemption under Notification No. 175/86-C.E. while clearing job-work goods on a value basis that included only job charges in the invoices, though the assessable value for duty also included the cost of raw materials. The majority held that the exemption limit under the notification had to be computed on the value determined under Section 4, that the department was not bound to compile the progressive clearance value for the assessee, and that the RT 12 returns reflected the clearance figures under incorrect headings with the Section 4 column shown as nil. On these facts, the majority found suppression of the correct value and concluded that the assessee should have sought clarification if in doubt.

Conclusion: The extended period of limitation was rightly invoked and the penalty was justified; the demand was not time-barred.

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