Assessable value and extended limitation: separately supplied bought-out accessories were excluded, and no suppression justified extended demand.

Bought-out accessories supplied separately at the customer's insistence are not includible in the assessable value of a manufactured excisable product when they are not part of the goods cleared from the factory and are only optional additions improving performance. The same reasoning also affects limitation: where the assessee paid duty on the manufactured product and the separate supply did not involve positive suppression or misstatement with intent to evade duty, the extended period cannot be invoked. On that basis, the duty demand and penalties were set aside and consequential relief followed.

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Issues: (i) Whether the value of hot air generator and filter blower, supplied separately at the customers' insistence, was includible in the assessable value of the paint booth; (ii) Whether the demand could be sustained by invoking the extended period of limitation.

Issue (i): Whether the value of hot air generator and filter blower, supplied separately at the customers' insistence, was includible in the assessable value of the paint booth.

Analysis: The paint booth was manufactured and cleared as a complete item, while the generator and filter blower were bought-out items not manufactured by the assessee. They were not brought into the factory or cleared along with the paint booth as part of the manufactured goods. Their function was only to improve drying efficiency after painting, and they were optional additions rather than integral components of the booth. Bought-out accessories supplied separately cannot be added to the assessable value of the excisable product.

Conclusion: The value of the hot air generator and filter blower was not includible in the assessable value of the paint booth, in favour of the assessee.

Issue (ii): Whether the demand could be sustained by invoking the extended period of limitation.

Analysis: The dispute involved a legal issue on which two views were possible. The assessee had paid duty on the paint booth itself, and the separate supply of the bought-out items did not amount to positive suppression or misstatement with intent to evade duty. The necessary ingredients for invoking the extended period were therefore absent.

Conclusion: The extended period of limitation was not available to the Revenue, in favour of the assessee.

Final Conclusion: The duty demand and penalties were set aside, and the appeals succeeded with consequential relief.

Ratio Decidendi: Bought-out items supplied separately and not forming part of the manufactured excisable goods are not includible in assessable value, and the extended period cannot be invoked without positive suppression or intent to evade duty.

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