Factory gate sale price governs excise valuation when disclosed; demand was time-barred due to departmental knowledge.

Where the normal factory gate sale price under section 4(1)(a) was available and undisputed, it had to be adopted as the assessable value for tea chest plywood, even though two buyers purchased at a lower price and resold the goods at a higher price; the contrary valuation was unsustainable. The duty demand was also held to be time-barred because the assessee had disclosed the pricing arrangement to the jurisdictional Superintendent, placing the material facts within departmental knowledge, while the show cause notice was issued beyond the normal six-month period. The duty and penalty confirmation was set aside and consequential relief followed.

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Issues: (i) Whether, for valuation of tea chest plywood, the factory gate sale price available under section 4(1)(a) could be adopted as the assessable value despite sales to two customers at a lower price and their further resale in the market at a higher price. (ii) Whether the duty demand was barred by limitation in view of the departmental knowledge of the price arrangement.

Issue (i): Whether, for valuation of tea chest plywood, the factory gate sale price available under section 4(1)(a) could be adopted as the assessable value despite sales to two customers at a lower price and their further resale in the market at a higher price.

Analysis: The normal factory gate sale price was available and was not disputed by the Revenue. The mere fact that two buyers purchased at a lower price and resold the goods at a higher price did not justify discarding the factory gate price when the assessee had itself adopted and paid duty on that higher factory gate price.

Conclusion: The assessable value had to be based on the factory gate sale price, and the contrary valuation was unsustainable.

Issue (ii): Whether the duty demand was barred by limitation in view of the departmental knowledge of the price arrangement.

Analysis: The assessee had informed the jurisdictional Superintendent by letter dated 8-11-1991 about the pricing arrangement, showing that the material facts were within the knowledge of the Revenue. The show cause notice issued on 17-3-1994 was beyond the normal limitation period of six months.

Conclusion: The demand was barred by limitation.

Final Conclusion: The order confirming duty and penalty was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where the normal factory gate sale price under section 4(1)(a) is available and disclosed, it must be adopted for excise valuation, and a demand raised beyond the normal period is time-barred when the relevant facts were already within the knowledge of the department.

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