Assessable value must include pre-clearance fitted components, while nondisclosure can justify extended limitation and limited relief on penalty.

Where plastic caps are fitted to tubes before clearance from the factory, their value forms part of the assessable value of the finished tubes. Nondisclosure of the exclusion of cap value supports invocation of the extended limitation period for demand. Penalty may be reduced where the facts justify moderation, and interest under Section 11AB is not leviable for clearances made before the provision's recognised temporal coverage. The discussion therefore treats component value inclusion and extended limitation as sustainable, while denying interest and granting partial relief on penalty.

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Issues: (i) whether the value of plastic caps fitted to tubes before clearance from the factory was includible in the assessable value of the tubes; (ii) whether the extended period of limitation was available for demand; (iii) whether the penalty and interest were sustainable in full.

Issue (i): whether the value of plastic caps fitted to tubes before clearance from the factory was includible in the assessable value of the tubes.

Analysis: The governing principle applied was that duty is leviable on the value of the final excisable product as cleared from the factory gate. Where the caps were fitted to the tubes before removal, the tubes cleared were the finished goods in that form, and the value of the fitted caps formed part of the value of the goods sold from the factory.

Conclusion: The value of the plastic caps was includible in the assessable value of the tubes, against the assessee.

Issue (ii): whether the extended period of limitation was available for demand.

Analysis: The finding turned on nondisclosure of the fact that the cap value was being excluded from assessable value. On that basis, the element required to invoke the longer limitation period was treated as established.

Conclusion: The extended period of limitation was correctly invoked, against the assessee.

Issue (iii): whether the penalty and interest were sustainable in full.

Analysis: The penalty was considered excessive on the facts and was reduced. As to interest, the relevant circular limited invocation of Section 11AB to clearances after 28.9.1996, whereas the clearances in question were earlier, so interest was held not leviable.

Conclusion: The penalty was reduced and interest under Section 11AB was disallowed, partly in favour of the assessee.

Final Conclusion: The duty demand and limitation finding were upheld, but the assessee obtained relief on penalty and interest, resulting in a partly allowed appeal.

Ratio Decidendi: When a component is fitted to the manufactured goods before removal from the factory, its value forms part of the assessable value, and deliberate nondisclosure justifies invocation of the extended limitation period; however, statutory interest cannot be levied beyond the temporal scope expressly recognised for the provision.

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