Per Justice K. Sreedharan :

Appellants, M/s. Mazagon Dock Ltd., is a Public Sector Undertaking. They challenge the order-in-original No. 14/91 dated 29-11-1991 whereby the adjudicating authority confirmed the demand of differential duty amounting to Rs. 1,44,53,945.00 as claimed in show cause notice dated 15-3-1990. This demand was in relation to manufacture of a jack-up rig cleared to M/s. ONGC, Bombay and delivered against gate pass No. 15 dated 13-4-1988. The adjudicating authority further imposed a penalty of Rs. 25 lakhs on the appellant under Rule 173Q of the Central Excise Rules, 1944 as well.

2. The short facts necessary for the disposal of this appeal are as follows :-

3. Oil and Natural Gas Commission placed orders with the appellant firm for the manufacture of two jack-up rigs. Terms and conditions of the transaction were contained in contract executed in February 1983. Clause 25.2 of the contract provided for the price of the rigs. Rupee content was Rs. 21.32 crores per rig and foreign exchange content came to Rs. 20.48 crores per rig. The total price per rig was fixed at Rs. 41.80 crores. It also stated that the total contract price for the two rigs is Rs. 83.60 crores. Pursuant to this contract, rigs were manufactured by the appellant. They filed price list. Price list dated 29-3-1988 showed price of one rig at Rs. 45,88,55,418.00. That price list was approved by the excise authorities as could be seen from the date affixed under their signature, namely, 15-4-1988. Monthly periodical returns of excisable goods manufactured by the appellant were regularly being filed in form RT-12. In the said form for the month of April 1988, value of the rig was mentioned and the duty payable thereon was also included. Basic excise duty at the rate of 10% on the value of the rig came to Rs. 4,58,85,542.00. Special excise duty at the rate of 5% of basic duty came to Rs. 22,94,277.00. The entire duty on the value of the rig was paid. Form RT-12 filed by the appellant was accepted by the inspector of Central Excise, Mangalore on 1-6-1988. Long subsequent to the said payment, it is stated that officers of the excise department came by the balance-sheet published by the appellant. That made mention of subsidy receivable by them from Government. On enquiry, it is alleged, that they came to know of the appellant getting 30% of the price of the rigs as subsidy consisting of 20% from the Central Government and 10% from ONGC. It is the case of the excise department that from the said information they came to know that the price fixed in the contract entered into between ONGC and the appellant did not bring out the actual price of the jack-up rigs manufactured. Consequently, show cause notice dated 15-3-1990 was issued calling upon the appellant to pay the differential duty.

4. Appellant raised all possible contentions before the adjudicating authority. They were that the contract between the appellant and the ONGC brought out the actual price of the rigs manufactured, that no other consideration flowed to the appellant from ONGC, that the subsidy given by the Central Government cannot be taken to increase the price of the rigs manufactured, that no facts were suppressed from the knowledge of the excise department to invoke the extended period of limitation under the proviso to Section 11A (1) of the Central Excise Act, 1944 and that the jack-up rigs were exported out of India and so are not excisable to duty. The adjudicating authority negatived all the contentions raised by the appellant and passed the impugned order.

5. Main argument advanced by learned counsel representing the appellant is bar of limitation. He then contended that the adjudicating authority was not justified in adding the subsidy payable by Central Govt. to the value of the jack-up rigs manufactured. Lastly, he submitted that the rigs manufactured were exported out of India and so, the appellant was not liable to pay any amount by way of excise duty. We shall proceed t