Free-of-cost moulds and suppression in valuation justified inclusion in assessable value and extended limitation
Amortisation cost of moulds supplied free of cost by the buyer was held includible in the assessable value of the manufactured goods because that value formed part of the consideration for the goods, and the Larger Bench view on valuation was applied against the assessee. The extended period of limitation was also upheld because the non-inclusion of the amortisation cost was not disclosed to the department, while invoices stated that price was the sole consideration despite the added value element. The demand and interest were sustained, and the appeal failed on both merits and limitation.
Issues: (i) Whether the amortization cost of moulds supplied free of cost by the buyer was required to be included in the assessable value of the manufactured goods; (ii) Whether the extended period of limitation was invocable on the ground of suppression of facts and misdeclaration.
Issue (i): Whether the amortization cost of moulds supplied free of cost by the buyer was required to be included in the assessable value of the manufactured goods.
Analysis: The assessable value had to be determined by including the amortization cost of the moulds supplied free of cost, as the value of such moulds formed part of the consideration for the manufactured goods. The issue on merits had already been decided against the assessee by the Larger Bench, and the earlier contrary position did not alter the applicable valuation principle for the period in dispute.
Conclusion: The inclusion of amortization cost in the assessable value was upheld against the assessee.
Issue (ii): Whether the extended period of limitation was invocable on the ground of suppression of facts and misdeclaration.
Analysis: The non-inclusion of amortization cost was not disclosed to the department, and the invoices contained a declaration that price was the sole consideration despite the existence of an additional element of value. These facts supported a finding of suppression and misdeclaration, and the subsequent emergence of conflicting decisions did not neutralise the failure to disclose the material fact during the relevant period.
Conclusion: The extended period of limitation was correctly invoked against the assessee.
Final Conclusion: The demand and interest were sustained, and the appeal failed on merits as well as on limitation.
Ratio Decidendi: Free-of-cost moulds supplied by the buyer, where their amortization cost forms part of the value of the manufactured goods, must be included in assessable value, and deliberate non-disclosure of such value addition justifies invocation of the extended period of limitation.
TaxTMI 
AI Drafter ✕
TaxTMI 
