Captive consumption valuation must follow normal sale price when identical goods are sold outside; disclosed pricing defeats suppression.

Where identical goods are sold to outside customers and a normal price exists under Section 4(1)(a) of the Central Excise Act, that price governs valuation of goods captively consumed, and Rule 6 of the Central Excise (Valuation) Rules does not justify a separate captive-consumption price. The department's valuation method was sustained on that issue. Limitation also turned on disclosure: because the assessee filed price lists showing differential values and relevant invoices were placed with RT 12 returns, the department was treated as having knowledge of the pricing practice, so suppression was absent and the demand was barred by limitation.

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Issues: (i) whether, where a normal price exists for sales to outside customers, that price must be adopted for goods captively consumed, and whether Rule 6 of the Central Excise (Valuation) Rules can justify a separate captive-consumption price; (ii) whether the demand was barred by limitation on account of departmental knowledge of the assessee's pricing for captive consumption.

Issue (i): whether, where a normal price exists for sales to outside customers, that price must be adopted for goods captively consumed, and whether Rule 6 of the Central Excise (Valuation) Rules can justify a separate captive-consumption price

Analysis: Where assessable goods are sold and a normal price is available under Section 4(1)(a) of the Central Excise Act, the valuation framework for captive consumption does not permit adoption of a separate price based on Rule 6 of the Central Excise (Valuation) Rules. The price at which identical goods were sold to outside customers was therefore the proper benchmark for the goods consumed within the assessee's own unit.

Conclusion: The adoption of the outside sale price for captively consumed goods was upheld, and this issue was decided against the assessee.

Issue (ii): whether the demand was barred by limitation on account of departmental knowledge of the assessee's pricing for captive consumption

Analysis: The assessee had filed price lists showing different values for goods sold to an outside purchaser and goods cleared for captive consumption, and the relevant invoices were also placed with RT 12 returns. On those facts, the department was held to have knowledge of the differential valuation throughout the relevant period, so the foundation for alleging suppression was absent.

Conclusion: The demand was held to be barred by limitation, and this issue was decided in favour of the assessee.

Final Conclusion: The valuation adopted by the department was sustained, but the demand failed on limitation, resulting in relief to the assessee and setting aside of the impugned order.

Ratio Decidendi: When a normal price under Section 4(1)(a) is available for identical goods, that price governs captive consumption valuation, and limitation cannot be invoked where the department had disclosed knowledge of the relevant pricing practice.

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