LexNIRLON LTD. versus COMMISSIONER OF CENTRAL EXCISE, MUMBAI
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[2015] 4 S.C.R. 335 NIRLON LTD. v. COMMISSIONER OF CENTRAL EXCISE, MUMBAI (Civil Appeal No. 7642 of 2004) APRIL 23, 2015 [A.K. SIKRI AND R. F. NARIMAN, JJ.] A B Central Excise Act, 1944 - Valuation of goods - C Assessee selling products manufactured by it - Dispute as regards valuation of the product which are removed for captive consumption and to be used at the factory - Price declaration by assessee showing same price for the goods - Report by cost accountant that the two goods are different D from each other - Issuance of two show cause notices to assessee demanding differential duty ulr. 6(b)(ii) - Demand upheld and imposition of penalty - Dismissal of appeal thereagainst - On appeal, held: Findings of facts by the authorities below that the two kinds of goods were not E comparable with each other and therefore, the goods which were removed for captive consumption to be used by the factory were to be valued u/r. 6(b)(ii) and the price declaration given by assessee applying r. 6(b)(i) was erroneous - Assessee had admitted some variations in the two types of F goods thus, the opinion of the authorities does not call for any interference - Further, there was no ma/a fides on the part of the assessee in filing the declaration ulr. 6(b )(i) in order to evade the excise duty - When the entire exercise was revenue neutral, assessee could not have achieved any G purpose to evade the duty- Demand as regards show cause notice dt 25.02.2000 confirmed and as regards, show cause notice dt 03.03.2001, part of the demand being beyond 335 H 336 SUPREME COURT REPORTS [2015] 4 S.C.R. A limitation set aside - Imposition of penalty also set aside - Central Excise Tariff Act - Central Excise Valuation Rules, 1975 - rr. 6(b)(i) & (ii). CIVIL APPELLATE JURISDICTION: Civil Appeal No. B 7642 of 2004. From the Judgment and Order dated 01.10.2004 of the Customs, Excise and Service Tax Appellate Tribunal, West Regional Bench at Mumbai in Appeals No. E/3655/2001 - C MUM. S. K. Bagaria,AlokYadav, Somnath Shukla, K.AjitSingh, Praveen Kumar for the Appellant. K. Radhakrishnan, Tara Chandra Sharma, Sunita Rani D Singh, B. K. Prasad, Anil Katiyar for the Respondent. The Judgment of the Court was delivered by A. K. SIKRI, J. 1.The appellant herein is the manufacturer E 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 F factory gate as well as removed for captive consumption to its another factory at Tarapur. At Tarapurfactory, the said yc:11n are utilised for manufacturing final products. 2. The dispute has arisen in respect of the valuation of the G 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 H referred to as 'Act') declaring the wholesale price of TCY for NIRLON LTD. v. COMMISSIONER OF CENTRAL 337 EXCISE, MUMBAI [A. K. SIKRI, J.] such goods by showing the same price at which the goods A 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 B 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 C removed for captive consumption by the appellant itself for its Tarapur factory. This resulted in the appointment of a cost accountant by the Commi~sioner to go into this issue. 4. It appears that the cost accountant had given some D •sport 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 E issuance of two show cau
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