Bona fide tariff dispute and valuation by date of removal governed limitation and duty computation under excise rules.

A bona fide dispute over tariff classification did not amount to mis-statement or wilful mis-statement for extending limitation under Section 11A of the Central Excises and Salt Act, 1944, so the ordinary six-month period applied and the five-year period was unavailable. For valuation, duty had to be computed under Rule 9A(1)(ii) of the Central Excise Rules, 1944, because the rate and tariff valuation were to be taken as on the date of actual removal of the goods; the residuary Rule 9A(5) could not be used where the specific rule applied and the clearances were supported by proper excise papers.

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Issues: (i) Whether the demand of duty was governed by the extended period of limitation of 5 years under Section 11A of the Central Excises and Salt Act, 1944, or by the shorter period of 6 months; (ii) whether duty was to be determined under Rule 9A(1)(ii) of the Central Excise Rules, 1944, or under Rule 9A(5) of the Central Excise Rules, 1944.

Issue (i): Whether the demand of duty was governed by the extended period of limitation of 5 years under Section 11A of the Central Excises and Salt Act, 1944, or by the shorter period of 6 months.

Analysis: A dispute by the assessee as to the correct tariff item did not amount to mis-statement or wilful mis-statement so as to attract the extended limitation. The department could have protected its position by issuing a demand within the ordinary limitation period, and the facts did not justify invocation of the longer period.

Conclusion: The shorter limitation period of 6 months applied, and the extended period of 5 years was not available.

Issue (ii): Whether duty was to be determined under Rule 9A(1)(ii) of the Central Excise Rules, 1944, or under Rule 9A(5) of the Central Excise Rules, 1944.

Analysis: Rule 9A(1)(ii) governed duty on the basis of the rate and tariff valuation applicable on the date of actual removal of the goods, while Rule 9A(5) was only a residuary provision. Since the clearances were supported by proper excise papers and the date of actual removal was known, the residuary rule did not apply.

Conclusion: Duty had to be worked out under Rule 9A(1)(ii), not under Rule 9A(5).

Final Conclusion: The demand was confined to the ordinary limitation period and the duty was to be reworked under the provision applicable to the date of actual removal, with the appellate order modified accordingly.

Ratio Decidendi: A bona fide dispute on tariff classification does not by itself amount to wilful mis-statement for extending limitation, and a residuary valuation rule cannot be applied where the specific rule governing the date of removal is attracted.

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