MAIN POINT
Extended period of limitation will not be available u/s 11 if declaration filed under Rule 6(b)(i) instead of Rule 6(b)(ii) of the Central Excise Valuation Rules, 1975 is not mala fide.

Judgment

A.K. Sikri, J.

The appellant herein is the manufacturer of Tyre Cord Yarn (TCY) and Tyre Cord Fabric (TCB) falling under Chapter 54 and 59 of the Central Excise Tariff Act respectively. The aforesaid goods TCY and TCB are manufactured by the appellant at its Goregaon factory. The products so manufactured are sold by the appellant at the factory gate as well as removed for captive consumption to its another factory at Tarapur. At Tarapur factory, the said yarn are utilised for manufacturing final products.

2. The dispute has arisen in respect of the valuation of the TCY which are removed for captive consumption and to be used at Tarapur factory of the respondent.

3. The appellant has been filing the price list proforma under Section 4(1) of the Central Excise Act, 1944, (hereinafter referred to as 'Act') declaring the wholesale price of TCY for such goods by showing the same price at which the goods are sold by the appellant at the factory gate to the third parties. Such price list in Proforma Part I under Section 4 of the Act was filed on 01.03.1994 and 28.03.1994. It was again filed on 01.03.1998. The price declaration so made was looked into by the Superintendent of Central Excise and he was not satisfied with this declaration as according to him, the price could not be declared at the same rate at which the goods are sold by the appellant at the factory gate to others. According to him, there was a difference between the goods which were cleared at the factory gate to be sold to the third parties and removed for captive consumption by the appellant itself for its Tarapur factory. This resulted in the appointment of a cost accountant by the Commissioner to go into this issue.

4. It appears that the cost accountant had given some report in which he had opined that the two goods are different from each other and therefore, price declaration which was filed by the appellant in terms of Section 4(2) of the Act read with Rule 6(b)(i) of Central Excise Valuation Rules, 1975 (hereinafter referred to as Rules) was incorrect. This led to the issuance of two show cause notices to the appellant. First show cause notice is dated 25.02.2000 covering period from August, 1999 to January, 2000. In this show cause notice, amount of Rs.78,20,365/- for the aforesaid period was demanded as differential duty under Rule 6(b)(ii) of the aforesaid Rules. The second show cause notice was issued on 03.03.2001 which was for the period from February, 1996, to June, 2000. Both these notices resulted in confirmation of the demands mentioned in the show cause notices as well as imposition of penalties upon the appellant. The appellant filed appeal against the orders passed by the Commissioner. However, the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as 'CESTAT') has dismissed this appeal by the common judgment dated 01.10.2004. It is against this judgment, present appeal is preferred by the appellant.

5. After going through the material on record as well as the orders of the Commissioner and the CESTAT, we find that findings of facts are recorded by the authorities below that the two kinds of goods were not comparable with each other and therefore, the goods which were removed for captive consumption to be used by Tarapur Factory were to be valued under Rule 6(b)(ii) of the Rules and the price declaration given by the appellant applying Rule 6(b)(i) of the said rules was erroneous. We also find that the appellant had even admitted some variations in the two types of goods in its reply to the show cause notices itself. In these circumstances, insofar as the opinion of the authorities with regard to different nature of the goods is concerned, that does not call for any interference by this court.

6. Faced with the aforesaid situation, Mr. S.K. Bagaria, learned senior counsel appearing for the appellant, has pressed the issue of limitation. His submission is that the second show cause notice dated 03.03.2001 covered the peri