Residual valuation applies to inter-unit transfers lacking captive consumption; limitation cannot be extended on already-known facts.

Inter-unit clearances of PSC pipes between concerns with common partners were not eligible for captive-consumption valuation because the receiving unit did not use the goods to manufacture another article. Value therefore had to be redetermined under the residual best-judgment mechanism under the applicable valuation rules and Section 4, and the matter was remanded for fresh adjudication. The demand for April 1998 to December 1998 was also held time-barred because earlier notices on identical facts had already been issued within limitation, the relevant facts were known to the department, and suppression could not be invoked to extend limitation.

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Issues: (i) Whether clearances of PSC pipes by the Jaipur unit to the Secunderabad unit, both having common partners, were to be valued under the captive-consumption provisions or under the residual valuation provisions; (ii) Whether the demand for the period April 1998 to December 1998 was barred by limitation.

Issue (i): Whether clearances of PSC pipes by the Jaipur unit to the Secunderabad unit, both having common partners, were to be valued under the captive-consumption provisions or under the residual valuation provisions.

Analysis: The two concerns were treated as one entity because the partners were common, and the goods moved from one unit to the other were not sold in the ordinary course. However, the goods were not used by the receiving unit for manufacture of another article, so the captive-consumption valuation provisions were inapplicable. The appropriate course was to adopt the residual valuation mechanism and determine value by best judgment consistent with the valuation rules and Section 4.

Conclusion: The assessable value had to be redetermined under Rule 7 of the Central Excise Valuation Rules, 1975 for the period upto 30-6-2000 and under Rule 11 of the Central Excise Valuation Rules, 2000 for the later period, and the matter was remanded for fresh adjudication.

Issue (ii): Whether the demand for the period April 1998 to December 1998 was barred by limitation.

Analysis: Earlier show-cause notices on identical facts had already been issued within the normal limitation period. In the later notice, the allegation of suppression was added to invoke the extended period, but the facts were already within departmental knowledge. The price declarations filed by the assessee also showed the valuation basis adopted during the relevant period.

Conclusion: The extended period was not available, and the demand for April 1998 to December 1998 was time-barred.

Final Conclusion: The demand for the earlier period was set aside as time-barred, while the remaining demands were sent back for fresh valuation and recomputation of duty and penalty under the proper valuation rules.

Ratio Decidendi: Where goods are transferred between units of the same concern but are not captively consumed for manufacture of another product, valuation must be undertaken under the residual best-judgment provisions; and the extended limitation period cannot be invoked on the same facts already known to the department through earlier notices and disclosures.

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