Independent-buyer prices govern related-unit excise valuation where goods are also sold, while nondisclosure may trigger extended limitation.

Where excisable goods are partly sold to independent buyers and partly transferred to a sister unit for captive consumption, Rule 8 does not apply to the sister-unit clearances because the goods are also sold. The available independent-buyer price may instead determine assessable value through the residuary valuation mechanism under Rule 11, consistent with Section 4(1)(a). The subsequent amendment to Rule 8 does not alter the method applicable to the disputed period. Excise returns that disclose only aggregate clearances, without separate quantity and value details for related-party transfers, may constitute suppression of material facts and support invocation of the extended limitation period for differential duty and consequential liabilities.

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Issues: (i) Whether goods partly sold to independent buyers and partly transferred to a sister unit for captive consumption were to be valued under Rule 8 on cost-plus basis or with reference to the independent-buyer price; (ii) Whether the extended limitation period was validly invoked for the differential excise-duty demand.

Issue (i): Whether goods partly sold to independent buyers and partly transferred to a sister unit for captive consumption were to be valued under Rule 8 on cost-plus basis or with reference to the independent-buyer price.

Analysis: During the material period, Rule 8 applied where excisable goods were not sold and were used captively. Since substantial quantities were sold to independent buyers, Rule 8 did not govern the sister-unit clearances. The available normal price for independent sales could be adopted through the residuary mechanism under Rule 11, consistently with Section 4(1)(a). The subsequent amendment of Rule 8 did not alter the applicable valuation method for the disputed period.

Conclusion: The independent-buyer sale price was the proper basis for valuation of the clearances to the sister unit; the differential duty demand was sustainable. The finding is against the assessee.

Issue (ii): Whether the extended limitation period was validly invoked for the differential excise-duty demand.

Analysis: The excise returns disclosed only aggregate clearance quantity and value, without separately disclosing the quantity and value of sister-unit clearances. This withheld material particulars concerning the lower valuation adopted for related-party transfers and constituted suppression of full and correct facts with intent to evade duty.

Conclusion: Invocation of the extended period of limitation was valid. The finding is against the assessee.

Final Conclusion: The valuation of sister-unit clearances was required to reflect the available independent-sale price, and the demand for the larger period, with consequential liabilities upheld in the impugned order, remained sustainable.

Ratio Decidendi: Where excisable goods are partly sold to independent buyers and partly cleared to a related unit for captive use, the readily available independent-sale price may determine the assessable value of related-party clearances under the residuary valuation mechanism; non-disclosure of separate related-party clearance details can justify extended limitation.

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