Assessable value of job-work goods must include amortised mould and die cost; audit disclosure defeats extended limitation.

Cost of moulds and dies supplied free of cost was required to be amortised into the assessable value of goods cleared on job work basis, so the valuation objection was rejected on merits. The extended period of limitation was not available because the department had audited the assessee's records, including purchase orders, challans and invoices, and the relevant valuation facts were already disclosed; suppression was therefore not established. On that basis, the order dropping the demand was sustained and the Revenue challenge failed.

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Issues: (i) whether the cost of moulds and dies supplied free of cost was required to be amortized in the assessable value of the goods cleared on job work basis; (ii) whether the extended period of limitation was invocable on the facts, particularly when the department had conducted audit of the assessee's records.

Issue (i): Whether the cost of moulds and dies supplied free of cost was required to be amortized in the assessable value of the goods cleared on job work basis.

Analysis: The valuation dispute was treated as settled against the assessees on merits, since the cost of moulds and dies used in manufacture had to be included by amortisation in the assessable value of the parts cleared to the principal manufacturer. The records showed that the goods were cleared after manufacture and invoicing under the applicable excise procedure, and the valuation principle relied on the inclusion of such cost in assessable value.

Conclusion: The issue was decided against the assessees on merits.

Issue (ii): Whether the extended period of limitation was invocable on the facts, particularly when the department had conducted audit of the assessee's records.

Analysis: The audit records showed that the department had scrutinised the purchase orders, the challans and invoices by which the moulds and dies were supplied free of cost, and the invoices issued by the assessees for clearance of the manufactured goods. The relevant facts were therefore within departmental knowledge during audit, and no objection had then been raised on non-inclusion of amortised cost. In these circumstances, suppression of facts was not established, and the case law relied on by the Revenue was distinguished because those matters did not involve such audit scrutiny.

Conclusion: The extended period of limitation was not invocable.

Final Conclusion: The order dropping the demand was sustained, and the Revenue's challenge failed.

Ratio Decidendi: Where the department has audited the relevant records and the material facts concerning valuation are already disclosed, the mere non-inclusion of a cost element does not by itself establish suppression so as to justify invocation of the extended period.

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