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2. Briefly the facts are that the company manufactures, amongst others, tyre cord yarn and tyre cord fabric falling under Chapter 54 and 59 of Central Excise Tariff Act, at their Goregaon Factory. The said goods are sold at the factory gate and also removed for captive consumption to the appellant's Tarapur factory. At Tarapur factory the goods are utilized in further manufacture of final products. On 1st March 1994 and 28th March 1994 the appellant filed the price lists in Proforma Part I under Section 4 of the Central Excise Act, 1944. In the price lists the appellant declared the whole sale price of the TCY and applied the same price for the said goods removed for captive consumption in the appellants' Tarapur factory. On 1st March 1998 the appellant filed a price declaration in respect of TCY being manufactured and removed for captive consumption. This price declaration was filed in terms of Section 4(2) read with Rule 6(b) (i) of the Central Excise Valuation Rules 1975. On the price declaration the appellant had also made a remark to the effect that the said TCY was sold at the same rate to wholesale buyers at their factory gate and accordingly adopted the same price for goods cleared for captive consumption. Later the appellant in his letter dt: 21.2.2000 informed the Superintendent of Central Excise that there is a difference, in quality and grade of the yarn sold to the customers at the Goregaon factory and the one that is captively consumed at Tarapur. In the light of this correspondence further investigation is conducted and several statements of the employees of the company were recorded. Consequent on this investigation a show cause notice was issued on 3.3.2001 asking the appellant to show cause why the assessable value of TCY cleared for captive consumption should not be arrived at by adopting cost construction method in terms' of Rule 6(b) (ii) of the Valuation Rules, as against valuation claimed by the appellant under Rule 6(b) (i), why a notional profit of 10% of cost of manufacture should not be added while arriving at assessable value, why the differential duty thus calculated as mentioned supra should not be demanded for the period February 1996 to June 2000 under proviso to Section 11A(1) of the Central Excise Act and why penalty should not be imposed etc.

4. On the first issue the Commissioner holds that the appellant filed price declarations on 1.3.94 and 28.3.94 in Proforma I declaring therein wholesale price of the product and adopted the same price for the captively consumed goods. The appellant did not file any further price declaration till 1.4.98 even though the assessable value varied during the period 94-98. Its only on 1.4.98 another price declaration was filed under Rule 173C read with Rule 6(b) (i) for effecting clearances of TCY for captive consumption. This declaration had a remark "the goods are sold at the same rate to the wholesale buyers". However the statements of Manager Finance, DGM Production, Quality Control-In-charge and Manager Marketing of the Company revealed that the goods sold at the factory gate are different in standard from the one cleared for captive consumption to Tarapur. Under Rule 6(b) (i) only the value of the comparable goods produced or manufactured by the asssessee or by any other assessee can be taken as the assessable value for captively consumed goods. He held that the appellant deliberately mis-declared that the goods cleared at the factory gate and the ones cleared for captive consumption are either same or comparable. The appellant suppressed the real value of captively consumed goods. He relied upon the statements of the various persons as mentioned above to come to this conclusion. He held that the appellant was well aware of the fact that the goods cleared to Tarapur differ in technical specification. The same goods are never sold at the factory gate and this material fact was suppressed from the department with an intention to evade duty. Hence show cause notice invoking proviso to Section 11A (1) is rightly issued. He discarded the appellants' contention as regards to availability of modvat credit of duty paid at Goregaon unit to Tarapur unit by holding that huge difference in the value between the product sold at the gate and the one cleared for captive consumption is a strong circumstance in support of the allegation that there was an intention to evade duty. In any case the evasion undeniably resulted in a financial gain for the assessee during the period.

5. On the second issue as to whether the value should be determined under Rule 6(b) (ii), he held that Rule 6(b) (ii) comes into play when the price of comparable goods produced or manufactured by the aeessess or by any other asseesee is not available. It has been brought out by the Department and also agreed to by the appellants employees that the goods cleared at the factory gate are different from the goods cleared for captive consumption. The appellant attempted to adopt the value of the goods cleared at the factory gate for the ones cleared for captive consumption by not disclosing that these two goods are different. The department succeeded in establishing that the goods produced in the factory at Goregaon and cleared there from are different from the ones cleared for captive consumption. He therefore held that value can be arrived at for the captively consumed goods under Rule 6(b) (ii).

10. The Ld. Jt CDR Shri N.K Gupta argued that the department was right in invoking the longer period of limitation while demanding the differential duty. The appellant did suppress the fact that the goods sold at the factory gate are different from the ones sent to Tarapur Unit for captive consumption. The appellants made a statement while filing the price declaration that a wholesale price exists at the factory gate for the goods cleared for captive consumption even when they were aware that the goods cleared to Trarapur are different. In regard to addition of 10% as notional profit he argued that issue is now well covered by the Larger Bench decision in the case of Raymonds Ltd. cited supra and the Commissioner rightly relied on it. In regard to revenue neutrality he argued that in a case of suppression and mis-declaration it is for the appellant to establish that there was revenue neutrality. It was further contended that the appellant was in error when he argued that the Commissioner did not deal with this issue in his order. In fact he dealt with this contention clearly on page 10 of his order. The Commissioner clearly stated that the assessee gained financially during the period by mis-declaring in the P.Ds that the goods are sold at the same rate to the wholesale buyers. The Ld. Jt. CDR also supported the Commissioner decision to impose penalties under Rule 209A.